Which of the Following Businesses Is Most Likely to Have

question 115

Multiple Choice

Which of the following businesses is most likely to have a problem with distribution because production and consumption of the product occurs simultaneously?

• A) a retailer that sells used books
• B) a company that manufacturers small kitchen appliances
• C) a company that repairs earthmoving equipment
• D) a chicken hatchery

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Definitions:

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products or job orders, calculated before the period begins based on estimated costs.

Machine-Hours

A measure of the amount of time that a machine is operated, used as a basis for allocating manufacturing overhead.

Variable Manufacturing Overhead

The portion of overhead costs that varies with production volume, including utilities and indirect labor expenses related to manufacturing.

Fixed Manufacturing Overhead

Costs in manufacturing that do not vary with the level of production output, such as salaries of managers and depreciation of factory equipment.