An Order from a Lower Price Buyer Should Be Accepted

question 101

True/False

An order from a lower price buyer should be accepted if the expected revenue from a higher price buyer is lower than the current revenue from the lower price buyer.

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Definitions:

Plantwide Predetermined Overhead Rate

A single overhead rate calculated by dividing estimated total manufacturing overhead costs by an estimated total cost driver, applied throughout the entire plant.

Job-Order Costing System

An accounting method that tracks the costs associated with producing a specific item or providing a particular service.

Direct Labor-Hours

The total hours worked by employees that can be directly associated with the production of specific goods or services.

Plantwide Predetermined Overhead Rate

A single overhead absorption rate calculated for an entire plant or factory, applied uniformly to all jobs or products.