Multiple Choice
The break-even point is the level of sales at which the profit equals:
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1. Introduction to Accounting
Fundamental Accounting Equation
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Join thousands of students who trust us to help them ace their exams!Watch the first videoMultiple Choice
A single predetermined overhead rate is called a(n):
A
Variable overhead rate
B
Plantwide overhead rate
C
Departmental overhead rate
D
Activity-based overhead rate
Verified step by step guidance1
Understand the concept of overhead rates: Overhead rates are used to allocate indirect costs to products or services. These rates can be predetermined and are calculated based on estimated costs and activity levels.
Learn about the types of overhead rates: There are several types of overhead rates, including plantwide overhead rate, departmental overhead rate, activity-based overhead rate, and variable overhead rate. Each has a specific method of allocation.
Focus on the plantwide overhead rate: A plantwide overhead rate uses a single rate to allocate overhead costs across the entire plant or organization. It is based on a common allocation base, such as direct labor hours or machine hours.
Compare with other overhead rates: Departmental overhead rates allocate costs based on specific departments, while activity-based overhead rates allocate costs based on activities. Variable overhead rates are tied to changes in production levels.
Conclude that the correct answer is 'Plantwide overhead rate': This is the single predetermined overhead rate that applies to the entire plant, as opposed to being specific to departments or activities.
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