Activity-Based Costing May Be Used to Charge Selling and Administrative

question 1

Multiple Choice

Activity-based costing may be used to charge selling and administrative expenses to:

• A)types of products sold.
• B)sales offices.
• C)sales persons.
• D)All of the above.

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Definitions:

Overhead Application Rate

The rate used to allocate indirect costs to products or services based on a predetermined formula, such as labor hours or machine hours.

Budgeted Overhead

An estimate of the total indirect costs that are expected to be incurred during a specified period in the production process.

Actual Production

The total quantity of goods or services produced by a company during a specific period, measured to assess operational efficiency and effectiveness.

Direct Labor Cost

The total cost of all labor that is directly involved in the production of goods or services.