Figure 6-9 -Refer to Figure 6-9.At Which Price Would a Price Ceiling

question 175

Multiple Choice

Figure 6-9
-Refer to Figure 6-9.At which price would a price ceiling be binding?

• A)$8
• B)$5
• C)$6
• D)$7

---

Definitions:

Predetermined Overhead Rate

A rate used to allocate indirect costs to different products or job orders based on a pre-established criterion, such as labor hours or machine hours.

Estimated Machine Hours

Estimated machine hours are an approximation of the operating hours of machinery within a specific time period, used in costing and budgeting processes to allocate overhead expenses based on machine usage.

Factory Overhead Account

An accounting category that accumulates all the indirect costs associated with manufacturing, excluding direct materials and direct labor.

Credit Balance

A credit balance is the amount of money a financial account shows on the credit side, indicating funds received or owed to the account holder.