Records of Information That a Buyer Should Request and Review

question 9

Multiple Choice

Records of information that a buyer should request and review during due diligence include all of the following except ________.

• A) Tax returns for the previous three to five years
• B) Bank deposit tickets for the past two years
• C) Employee records and turnover history for five years
• D) Supplier lists and references
• E) Personal correspondence

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Definitions:

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products or job orders, calculated by dividing estimated overhead costs by an allocation base.

Direct Labor-Hours

The total hours worked by employees who are directly involved in the production process, used as a basis for allocating costs to products.

Predetermined Overhead Rate

A rate used to allocate manufacturing overhead costs to each unit of production, based on estimated or budgeted overhead costs and activity.

Machine-Hours

A measure of production output or activity level based on the total hours machines are operating.