Bookkeeping

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Companies may be more interested in knowing their operating income instead of their net income as operating income only incorporates the costs of directly operating the company. Operating income can be calculated several different ways, but it is always found…

And some may insist that the under-applied overhead be allocated among cost of goods sold and ending inventories–which would defeat the purpose of basing the predetermined overhead rate on capacity. The predetermined overhead rate formula can be used to balance…

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