What are the primary reasons for using a predetermined overhead rate?
1 . A predetermined overhead rate allows overhead to be assigned during a period and therefore improves the timeliness of information.
2 . A predetermined overhead rate adjusts for variations in actual overhead costs that are unrelated to activity.
3 . A predetermined overhead rate overcomes the problem of fluctuations in activity levels that have no impact on actual fixed overhead costs.
4 . Using a predetermined overhead rate often allows managers to be more aware of individual product or product line profitability as well as the profitability of doing business with a particular customer or vendor.
You might also like to view...
The following items are excluded from research and development costs except
A) ongoing efforts to refine an existing product. B) design of tools involving new technology. C) introducing a new product. D) quality control during commercial production.
Which of the following is affected as a result of an error in performing the physical count of inventory at the end of the accounting period?
A) sales revenue B) operating expenses C) net income D) net cost of purchases
Cronie Enterprises purchased 10,000 shares of stock in Vector Corporation for $15 per share. Cronie's broker arranged for Cronie to pay only $4 cash per share at the date of purchase with the remaining balance to be paid in monthly installments. Cronie should record the investment by:
a. debiting the investment account for $40,000. b. debiting the investment account for $150,000. c. debiting the investment account for $100,000, and crediting a contra account for $60,000. d. not making an entry until the cost of the securities is paid in full.
A buyer's right to purchase, in good faith and without unreasonable delay, substituted goods from Seller B when Seller A breaches a sales contract is:
a. cover. b. specific performance. c. replevin. d. reclamation.