When Is the Predetermined Fixed Overhead Rate Used

question 32

Multiple Choice

When is the predetermined fixed overhead rate used?

• A) To apply fixed overhead to the cost of goods manufactured.
• B) To apply fixed overhead to the work in process inventory account.
• C) To apply fixed overhead to the cost of goods sold.
• D) To prepare the budget.

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Definitions:

Short Run

A term used in economics to describe a period during which at least one input, such as plant size, is fixed and cannot be changed by the firm.

Long Run

A period in which all factors of production and costs can be varied, and all market adjustments have been made.

Per Capita GDP Growth

The rate of growth of the Gross Domestic Product (GDP) per person in a specific area, commonly used to indicate economic health and living standards.

Labor Productivity Growth

An increase in the amount of goods and services produced per hour worked by employees, which is a key determinant of economic growth and competitiveness.