Which of the Following Is Not True Regarding Predetermined Overhead

question 109

Multiple Choice

Which of the following is not true regarding predetermined overhead rates?

• A) They are useful in estimating product costs before actual overhead amounts are known with certainty.
• B) They can normalize seasonal and random fluctuations in overhead costs so that product costs will be consistent throughout the year.
• C) With their use, it is no longer necessary to be able to identify a cost driver.
• D) With their use, too much or too little overhead may end up being allocated to a product or job.

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Definitions:

Leases

Contracts in which one party (the landlord) grants another party (the tenant) the right to use real estate for a specified period in exchange for payment.

UCC

Uniform Commercial Code, a comprehensive set of laws governing all commercial transactions in the United States.

Breach of Contract

Occurs when one or more parties involved in a contract fail to fulfill their legal obligations as stipulated in the agreement, potentially leading to legal action for damages or specific performance.

Purchase Order

A document issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services.