The Fixed Overhead Application Rate Is a Function of a Predetermined

question 77

Multiple Choice

The fixed overhead application rate is a function of a predetermined "normal" activity level.If standard hours allowed for good output equal this "normal" activity level for a given period,the production-volume variance will be:

• A)Zero.
• B)Favorable.
• C)Unfavorable.
• D)Either favorable or unfavorable depending on the budgeted overhead.

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Definitions:

Adjusted Trial Balance

A listing of all company accounts that will appear in the financial statements after adjustments have been made for journal entries.

Drawing Account

An account used to record withdrawals of business assets by the owner for personal use, reducing the capital account.

Salary Expense

The cost incurred by a company for the payment of regular salaries to its employees.

Accrued Salaries

Salaries that have been incurred but not yet paid by the end of a financial period, representing a liability for the business.