When Translating into the Functional Currency Foreign Currency Denominated Non-Monetary

question 1

Multiple Choice

When translating into the functional currency foreign currency denominated non-monetary items measured using historical cost must be translated using the:

• A) rate current at end of reporting period;
• B) average rate for the reporting period;
• C) exchange rate at the date of the transaction;
• D) rate prevailing at the end of the last financial year.

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Definitions:

Overapplied

A situation where the allocated manufacturing overhead costs exceed the actual manufacturing overhead costs incurred.

Denominator Activity

The total base activity used to allocate overhead costs in cost accounting, such as total direct labor hours or machine hours available.

Direct Labor-Hours

The total hours worked by employees directly involved in the manufacturing process, used in allocating manufacturing overhead.

Overapplied

A condition where the manufacturing overhead allocated to products exceeds the actual manufacturing overhead costs incurred.