Which of the following statements is not correct concerning multiple?overhead rate systemsXA multiple overhead rate system is usually more accurate than a a.system based on a single plantwide overhead rate.None of the given answers.bA multiple overhead rate system is more complex than a system .c.based on a single plantwide overhead rateA company may choose to create the same overhead rate for each .d.of its production departmentsIn departments that are relatively labor-intensive, their overheadcosts should be applied to jobs based on direct labor-hours rather.than on machine-hours.e

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Description: Which of the following statements is not correct concerning multiple?overhead rate systemsXA multiple overhead rate system is usually more accurate than a a.system based on a single plantwide overhead rate.None of the given answers.bA multiple overh

MULTIPLE OVERHEAD RATE For each department different overhead rates are being computed this is known…

Answered: Which of the following statements is…

Business

Accounting

Which of the following statements is not correct concerning multiple ?overhead rate systems

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 13MC: Activity-based costing systems: A. use a single predetermined overhead rate based on machine hours...

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Why would a manufacturing company with multiple production departments still prefer to use a single plantwide overhead rate?
Explain how a plantwide overhead rate, using a unit-based driver, can produce distorted product costs. In your answer, identify two major factors that impair the ability of plantwide rates to assign cost accurately.
Why would a manufacturing company with multiple production departments still prefer to use a single plantwide overhead rate?
Under what two conditions would the multiple production department factory overhead rate method provide more accurate product costs than the single plantwide factory overhead rate method?
Activity-based department rate product costing and product cost distortions Big Sound Inc. manufactures two products: receivers and loudspeakers. The factory overhead incurred is as follows: The activity base associated with the two production departments is direct labor hours. The indirect labor can be assigned to two different activities as follows: The activity-base usage quantities and units produced for the two products follow: Instructions Determine the factory overhead rates under the multiple production department rate method. Assume that indirect labor is associated with the production departments, so that the total factory overhead is 420,000 and 294,000 for the Subassembly and Final Assembly departments, respectively. Determine the total and per-unit factory overhead costs allocated to each product, using the multiple production department overhead rates in (1). Determine the activity rates, assuming that the indirect labor is associated with activities rather than with the production departments. Determine the total and per-unit cost assigned to each product under activity-based costing. Explain the difference in the per-unit overhead allocated to each product under the multiple production department factory overhead rate and activity-based costing methods. production department factory overhead rate and activity-based costing methods.
How do the multiple production department and the single plantwide factory overhead rate methods differ?
Under what two conditions would the multiple production department factory overhead rate method provide more accurate product costs than the single plantwide factory overhead rate method?
Activity-based costing systems: A. use a single predetermined overhead rate based on machine hours instead of on direct labor B. frequently increase the overhead allocation to at least one product while decreasing the overhead allocation to at least one other product C. limit the number of cost pools D. always result in an increase of at least one products selling price
Consider the information given on two products and their usage of two overhead activities (setups and inspection): Suppose that machine hours are used to assign all overhead costs to the two products. Which of the following is the best answer? a. Deluxe mowers are undercosted, and regular mowers are overcosted. b. Deluxe mowers and regular mowers are accurately costed. c. Deluxe mowers are overcosted, and regular mowers are undercosted. d. Using inspection hours to assign overhead costs is the best allocation approach.
The management of Wheeler Company has decided to develop cost formulas for its major overhead activities. Wheeler uses a highly automated manufacturing process, and power costs are a significant manufacturing cost. Cost analysts have decided that power costs are mixed; thus, they must be broken into their fixed and variable elements so that the cost behavior of the power usage activity can be properly described. Machine hours have been selected as the activity driver for power costs. The following data for the past eight quarters have been collected: Required: 1. Prepare a scattergraph by plotting power costs against machine hours. Does the scatter-graph show a linear relationship between machine hours and power cost? 2. Using the high and low points, compute a power cost formula. 3. Use the method of least squares to compute a power cost formula. Evaluate the coefficient of determination. 4. Rerun the regression and drop the point (20,000; 26,000) as an outlier. Compare the results from this regression to those for the regression in Requirement 3. Which is better?
Mt. Palomar Manufacturing Co. uses a process cost system. Its manufacturing operation is carried on in two departments: Machining and Finishing. The Machining Department uses the weighted average cost method, and the Finishing Department uses the FIFO cost method. Materials are added in both departments at the beginning of operations, but the added materials do not increase the number of units being processed. Units are lost in the Machining Department throughout the production process, and inspection occurs at the end of the process. The lost units have no scrap value and are considered to be a normal loss. Production statistics for July show the following data: Required: Prepare a cost of production summary for each department. (Round unit costs to three decimal places.) Which department will have an easier time determining how its unit costs compare from month to month? Why?
Which of the following statements is not correct concerning multiple overhead rate systems? a. In departments that are relatively machine-intensive, their overhead costs should be applied to jobs based on direct labor-hours rather than on machine-hours. b. None of the given answers. C. A company may choose to create a separate overhead rate for each of its production departments. d. A multiple overhead rate system is usually more accurate than a system based on a single plantwide overhead rate. A multiple overhead rate system is e. more complex than a system based on a single plantwide overhead rate.