Pinnacle Inc. has decided to switch from a traditional overhead allocation system to an ABC system. So far, the firm’s managers have decided that Pinnacle needs six different activity cost pools, including one for assembling products. When selecting a driver for this cost pool, Pinnacle’s managers should be sure to select -the product that appears to account for the majority of the costs in the product assembly pool. - the product that has the highest per-unit assembly cost. - the activity that appears to play the greatest role in determining the firm’s product assembly costs. - the activity that appears to play the greatest role in determining how many units the firm assembles in a given period.
Pinnacle Inc. has decided to switch from a traditional overhead allocation system to an ABC system. So far, the firm’s managers have decided that Pinnacle needs six different activity cost pools, including one for assembling products. When selecting a driver for this cost pool, Pinnacle’s managers should be sure to select -the product that appears to account for the majority of the costs in the product assembly pool. - the product that has the highest per-unit assembly cost. - the activity that appears to play the greatest role in determining the firm’s product assembly costs. - the activity that appears to play the greatest role in determining how many units the firm assembles in a given period.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter7: Allocating Costs Of Support Departments And Joint Products
Section: Chapter Questions
Problem 29E: A CPA would recommend changing from plantwide overhead rate application to departmental rates under...
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Pinnacle Inc. has decided to switch from a traditional
-the product that appears to account for the majority of the costs in the product assembly pool.
- the product that has the highest per-unit assembly cost.
- the activity that appears to play the greatest role in determining the firm’s product assembly costs.
- the activity that appears to play the greatest role in determining how many units the firm assembles in a given period.
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