Which of the Following Is the Correct Formula to Calculate

question 112

Multiple Choice

Which of the following is the correct formula to calculate the predetermined factory overhead rate?

• A) Estimated total factory overhead costs divided by estimated activity base.
• B) Actual total factory overhead costs divided by estimated activity base.
• C) Estimated total factory overhead costs divided by actual activity base.
• D) Actual total factory overhead costs divided by actual activity base.

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Definitions:

Common Stock

A form of corporate equity ownership, a type of security that represents ownership in a corporation and a claim on part of the corporation's profits.

Retained Earnings

The portion of a company's profits that is kept or retained rather than paid out to shareholders as dividends, typically used for reinvestment in the business, paying off debt, or other purposes.

Additional Paid-in Capital

The amount of money investors pay above the par value of stocks during an equity financing round; it represents excess capital collected from shareholders.