A Predetermined Overhead Application Rate

question 7

Multiple Choice

A predetermined overhead application rate:

• A)Expresses an expected relationship between overhead costs and an activity base.
• B)Can be determined by dividing budgeted direct labor cost by the budgeted factory overhead costs.
• C)Is computed at the end of the period once actual overhead costs are known.
• D)Applies the same amount of overhead to each product or service.

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Definitions:

Real Estate

Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water.

Impaired Note

A note receivable that has a reduced likelihood of being collected in full due to deterioration in the financial condition of the borrower.

Present Value

The present value of a sum of money or series of cash flows expected in the future, calculated using a specified discount or interest rate.

Contract Rate

It is the interest rate stated in a contract, such as a loan or lease agreement.