Answered: Common overheads which cannot be…

Common overheads which cannot be allocated directly to the specific departments need to be apportioned equitably on some suitable basis. List down TWO (2) basis of the apportionment of overheads.

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter5: Support Department And Joint Cost Allocation

Section: Chapter Questions

Problem 5DQ: How does management determine the order in which support department costs are allocated under the...

See similar textbooks

Related questions

Q: Which statement is false? Using a single plantwide overhead allocation rate is the simplest method…

A: Predetermined Overhead Rate: Predetermined overhead rate is a measure used to allocate the estimated…

Q: Which overhead allocation methods do not charge support department costs to a support department…

A: Overhead: It is the indirect cost incurred in addition to the direct costs for manufacture of…

Q: Which of the following journal entries is used to record fixed overhead costs allocated? O A. Fixed…

A: Fixed overhead cost: Cost needed to operate a business is called overhead cost. Fixed overhead cost…

Q: There are two types of costs originating from the modern agency problem: direct costs and indirect…

A: Costs The expenditure incurred on that is imputable to ascertain the value of a given item is…

Q: Traditional overhead allocations result in which of the following situations? a. Overhead costs…

A: The overhead cost under traditional costing is based on single predetermined overhead rate.

Q: Is it true that when departmentalized rates is used to allocate overhead costs, all departments…

A: Departmental overhead rates area unit employed by several makers rather than employing a single,…

Q: Describe one advantage and one disadvantage of prorating overapplied or underapplied overhead.

Q: It would be most appropriate to develop direct labor time standards for use in administrative…

A: The direct labor standard time is calculated based on how long it takes one employee to perform one…

Q: The process of assigning overhead costs to the jobs that are worked on is commonly called: a.…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Determining the basis for applying manufacturing overhead costs involves A. primarily the…

A: Manufacturing Overhead is the indirect cost incurred on Manufacturing activity in a factory . It is…

Q: Which of the following describe the reciprocal method for cost allocation: Select one: O a.…

A: Cost allocation is very important in case there are two types of departments are there. One is…

Q: Explain the benefits of using a predetermined overhead rate instead of an actual overhead rate.

Q: Under-allocated manufacturing overhead costs are always the result of which of the following…

A: Under Allocated manufacturing overhead occurs when Applied overhead are less than the actual…

Q: Assigning indirect costs to departments is completed by ________.

A: Indirect costs are those costs that are not directly related with the production or selling. These…

Q: Each of the following statements may (or may not) describe these technical terms. For each state-…

A: Costing : Costing is a technique of ascertaining costs.

Q: Help question 33

A: Answer: Option C is the correct answer.

Q: Required: 1. Determine the departmental contribution to overhead and the departmental net income for…

Q: Explain the difference between the engineered-cost and discretionary-cost approaches to…

A: Cost: The amount paid to purchase the asset, install it, and put it into operations, is referred to…

Q: Why is the use of departmental overhead allocation rates considered a refinement over the use of a…

A: Departmental overhead allocation rate: Departmental overhead allocation rates are rates that are…

Q: Compare the total support department costs allocated to each production department under each cost…

A: Calculation of the total support department costs to the Cutting department under the direct method…

Q: n responsibility accounting the most relevant classification of costs is discretionary and…

A: Solution: In responsibility accounting, responsibility are fixed at individual and department level.…

Q: Which statement is false? a. Using a single plantwide overhead allocation rate is the simplest…

Q: Of the following systems, which one is most likely to reduce cost distortion to a minimum?…

A: SOLUTION- ACTIVITY BASED COSTING- IT IS METHOD OF ALLOCATING THE COSTS TO THE ACTIVITIES INVOLVING…

Q: What factors should be considered in selecting an allocation base to be used in computing a…

Q: Which of the following is referred to as the second stage of cost allocation? O The allocation of…

A: Cost allocation is the assigning and allocating the cost to the specific objects, departments,…

Q: Describe the difference between direct and step-down methods to allocate service department costs to…

A: Service departments are those department which provides services to other departments like other…

Q: 5.The cost of conversion of inventories include all of the following, EXCEPT a. costs directly…

A: Introduction:- 1)Conversion costs include as follows under:- Direct labor overhead expenses incurred…

Q: What are the two primary elements that influence the amount of overhead that is absorbed?

A: Whenever overheads are absorbed in a rate determined by objective data, the absorbed overhead should…

Q: 1. Using the simultaneous method to allocate the service departments' costs to the producing…

A: Overhead means the cost incurred indirect in factory for the production of goods. Manufacturing…

Q: The direct method as used is one method that can be used to re-assign service department cost.…

A: Overhead refers to continuing business expenses that are not directly related to the production of a…

Q: Which types of overhead allocation methods result in the use of more than one overhead rate during…

A: Some expenses are not directly related to production, are known as overhead costs. Such overhead…

Q: s it true that the direct method is a method of cost allocation that charges costs of service…

A: Direct Method- Direct method refers to the method under which the cost of the service department is…

Q: Which of the following is false? Multiple Cholce Overhead costing accuracy is Improved by the use of…

A: A departmental rate of overhead is a charge that is based on the units of production made by various…

Q: 8 Identify the correct order of traditional approach method? I. Absorption of…

A: Overhead means the cost incurred indirect in factory for the production of goods. Manufacturing…

Q: Is is true that when a blanket rate is used, this means that a single rate is used to allocate…

A: Following is the answer to the given question

Q: Which of the following is the correct formula to compute the predetermined overhead rate?…

A: Predetermined overhead rate: Predetermined overhead rate is calculated befor the period begins. This…

Q: Which of the following is correct with respect to closing out underapplied manufacturing overhead to…

A: Overhead are those expenses which are not directly attributable to the production of goods or…

Q: Determining the basis for applying manufacturing overhead costs involves OA. primarily the…

A: Manufacturing overhead costs means all indirect costs incurred in production or selling of goods. It…

Q: The direct method as used by Ultimate Manufacturers is one method that can be used to re-assign…

A: Service department costs are the indirect costs to units produced and therefore these are known as…

Q: The entity's management is currently reviewing all costs of production. • If the entity's accounting…

A: Cost of production: It is the cost incurred in producing the goods or providing the services. These…

Q: :Activity-based costing .uses cost pool that collects costs related to the same activity .a O…

A: Activity-based costing is a method wherein the overheads are allocated based on different cost…

Q: Suggest a reasonable basis for allocating thefollowing indirect expenses to departments: janitorial…

A: Indirect costs are costs that are incurred indirectly for production or manufacturing of goods.…

Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

A. Common overheads which cannot be allocated directly to the specific departments need to
be apportioned equitably on some suitable basis. List down TWO (2) basis of the
apportionment of overheads.

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

In determining the costs transferred to a third department from a second department, are the costs from a first department considered? Are they considered in the computation of the ending work in process in the second department?
Which is not a task typically associated with ABC systems? A. calculating the overhead application rate for each cost pool B. applying a single cost rate C. identifying a cost driver D. more correctly allocating overhead costs
How does management determine the order in which support department costs are allocated under the sequential method?
Describe the two-stage process for departmental overhead rates.
The direct method as used is one method that can be used to re-assign service department cost.Discuss two other methods that can be used to re-assign service department overheads.
Which overhead allocation methods do not charge support department costs to a support department after its costs have been allocated? A. Reciprocal and direct method B. Stepdown and reciprocal method C. Direct and step-down methods D. Simultaneous solution and reciprocal method
How is a departmental contribution to overhead an effective tool in assessing each department's performance? (do not copy the answer from chegg)
" When the predetermined overhead rate is based on the level of activity at capacity, an item called the Cost of Unused Capacity might appear to be treated as a period expense on income statements prepared for internal management use." Please explain the statement (True/False) thoroughly with examples. What does "Cost of Unused Capacity" mean?
Describe an important cost-benefit issue involving accuracy versus timeliness in accounting for overhead.
Which statement is false? a. Using a single plantwide overhead allocation rate is the simplest method of allocating overhead costs. b. An allocation system that uses departmental overhead allocation rates is more refined than one that uses a plantwide overhead allocation rate. c. Allocation focuses on indirect costs. d. The predetermined overhead allocation rate is based on actual costs.
Define the terms under-allocated and over-allocated overhead. What factors contribute to each circumstance?
Which of the following statements is (are) false regarding the direct method of allocating service department costs? (A) The selection of an allocation base in the direct method is easier than the selection of an allocation base in the step method. (B) Once an allocation is made from a service department using the direct method, no further allocations are made back to that department.