What are some drawbacks of applying support department costs using a single plantwide rate?

Q: For each of the following costs, check the type that most likely apply (both variable and fixed…

A: VARIABLE COST: A variable cost is an expense that rises or falls in direct proportion to production…

Q: If the Activity-Based Costing (ABC) method's main intention is to find a possibility to cut the…

A: ABC (Activity based costing) framework was created to manage the drawbacks of customary costing…

Q: Vhich of the following statements Is true with regard to activity-based costing? Multiple Cholce…

A: Activity Cost: It is a cost-effective method that identifies the activities in an organization and…

Q: When production departments differ significantly in their manufacturing processes, factory overhead…

A: The factory overhead costs are usually allocated between different products or departments using the…

Q: Identify the following as fixed costs (F), variable costs (V), or mixed costs(M). office salaries…

A: Fixed cost will remain fixed for unit Variable cost will change with change in level of activity…

Q: Activity-based costing uses departments overhead rate to assign overhead .a O provides the same…

A: Activity based costing system is a costing system which says that all indirect costs or overheads…

Q: Activity-based costing is preferable in a system: A. when multiple products have similar product…

A: ABC is an accounting method that is used to trace the total cost of activities necessary to make a…

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: Why are support department costs difficult to apply to products?

A: Given: The difficulty in applying the support department costs on products.

Q: 4. Using the activity-based product costs as the standard, comment on the ability of departmental…

A: 1. Calculation of overhead cost per unit for each product using a plantwide rate based on direct…

Q: Which of the following would be true for a service company? a. ABC helps the company make more…

A: A ) Activity based costing helps the company to make decisions with the help of cost information..…

Q: Support department costs are allocated to Producing departments, in part, because:    Group of…

A: Departmental overhead rate is calculated by adding the allocated service costs to the overhead costs…

Q: The Ruling Company assigns plant administration costs to the production departments based on the…

A: Cost Driver: The direct reason for a cost is a cost driver. The overall cost incurred is impacted by…

Q: Explain the Over head cost control  benefits and drawbacks in manufacturing unit.

A: Cost accounting: A branch of accounting that deals with the calculation of the total cost incurred…

Q: Required: 1. Answer the following questions: a. Calculate the activity consumption ratios for…

A: Activity-based costing indicates the allocation of manufacturing overheads on the basis of their…

Q: Explain how a plantwide overhead rate, using a unit-based driver, can produce distorted product…

A: The plantwide overhead rate is a standard overhead rate used by a corporation to distribute all…

Q: Which one of the following activity shows semi-variable cost behaviour A. Unit level activity B.…

A: A semi-variable cost, also known as a semi-fixed cost or a mixed cost, is a cost composed of a…

Q: activity-based costing is preferable in a system a) when multiple products have similiar product…

A: To assign overhead costs to products, the methodology which is used is called Activity-Based…

Q: In your own words, explain the difference between absorption costing and variable costing methods.…

A: Absorption costing: Its also called as Full costing.

Q: What is a plantwide overhead rate? Why are multiple overhead rates, rather than a plantwide overhead…

A: Plantwide overhead rate is a single overhead rate which is used by the company to allocate it's…

Q: Which TWO of the following statements about activity-based costing (ABC) are true? a. Implementation…

A: Activity-based costing suitable when: A variety of products are created Overhead accounts for a…

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: If the activities that generate overhead costs vary between departments and products, adopting a…

A: The Answer

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

A:

Q: Which of the following statements is true with regard to activity-based costing?   Multiple Choice…

A: The overhead is applied to the production using various methods as traditional costing and activity…

Q: Most companies using a process costing systems have to calculate more than one EUP. Why? How many do…

A: Equivalents units for production (EUP): Equivalents units are a measure of the work done during an…

Q: Why is using a single plantwide overhead allocation rate not always accurate?

A: Single plant wide rate: Single plant-wide rate is the traditional method that is used to allocate…

Q: how to solve plantwide overhead rate versus departmental rates, effects on pricing decisions?

A: Since there are multiple sub parts in the question, calculation will be given for first three sub…

Q: appropriate allocation base for allocating overhead

A: Allocation base of overheads are most suitable basis through which overhead are allocated to…

Q: overhead costs for each department are allocated based on direct manufacturing labor costs of each…

A: Activity Based Costing: Activity based costing is one of the methods of costing to identify the…

Q: When faced with a limited availability of machine-hours,management should consider producing those…

A:

Q: What do you think are some advantages for using the ABC method versus a single plant-wide rate or…

A: Costing: Management of manufacturing and administration costs by allocating expenses to different…

Q: If JIT manufacturing is used and each manufacturing cell produces a single product, which of the…

A: The costs incurred in the manufacturing process can be classified as direct or indirect cost. The…

Q: The __________ method uses different rates for each production department to allocate factory…

A: Activity-Based Costing: Activity-based is the method of costing which is used to assign indirect…

Q: Which one of the following is not a step in allocating the support department cost to the production…

A: Organizations distribute cost to income generating divisions for ascertaining the all out cost…

Q: Explain briefly why plant-wide, department, and activity-based costing systems show different costs…

A: Plant-wide: Under the plant-wide system, a single rate is used to allocate or assign entire…

Q: When activity-based costing is used, why do manufacturing overhead costs often shift from…

A:

Q: Which of the following statements is true regarding activity-based costing systems?     ABC…

A: Activity-based costing systems have separate indirect cost allocation rates for each activity.  ABC…

Q: What is a potential disadvantage of the reciprocal method? a. It is the most complex method of cost…

A: Reciprocal method: It is the method in which the allocation of costs spent on other departments by…

Q: Describe some costs and benefits of using multiple overhead rates instead of a plantwide overhead…

A: The advantage of using the multiple overhead rates is that the product costing information would…

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.