What is a plantwide overhead rate? Why are multiple overhead rates, rather than a plantwide overhead rate, used in some companies?

Q: How have advances in manufacturing technology affected overhead application?

A: Overhead application: It is a process of allocating the cost to the jobs, the allocation of cost is…

Q: Providing the power required to run production equipment is an example of unit-level activity. Why…

A: SOLUTION- Unit‐level activities occur every time a service is performed or a product is made. The…

Q: a. TRADITIONAL - What is traditional cost allocation for manufacturing overhead? Give an example of…

A: For ascertaining the accurate product cost or total production cost of the manufacturing…

Q: The use of a plantwide manufacturing overhead rate implies that the activities that cause overhead…

A: The Answer

Q: how do I find total over- or underapplied fixed manufacturing overhead?

A: Overhead: Overhead refers to the costs, which are utilized in business activities, however cannot be…

Q: What was the company’s plantwide predetermined overhead rate?

A: Meaning of overhead rate: The overhead rate is the total of indirect cost for a specific reporting…

Q: What is a predetermined overhead rate and explain why many companies use it?

A: The outlays that are not directly related to the production are known as overheads. These can be of…

Q: How many Work in Process accounts are maintained in a company that uses process costing?

A: Process Costing:   Process costing is a method of costing where the production is continuous and…

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 of the following is not a factory overhead allocation method? a.activity-based costing…

A: Introduction: Various cost allocation methods are used to allocate factory operating costs to units…

Q: Why is direct labor a poor base for allocating overhead in many companies?

A:

Q: Explain how predetermined factory overhead rates are computed and why they are used to apply factory…

A: Factory overhead: Factory overhead is the indirect cost consisting of indirect material, indirect…

Q: Why do companies use predetermined overhead rates rather than actual manufacturing overhead costs to…

A: If actual manufacturing overheads are applied then  costs are unknown. if calculated need to wait…

Q: A factory overhead rate applied to the whole plant is based on the assumption that all overhead is…

A: The Answer

Q: Is it possible to have under- or overapplied overhead costs in a process costing system? Explain.

A: Process Costing: Process costing is a method of cost accounting, which is used when the production…

Q: What happens to overhead rates based on direct labor when automated equipment replaces direct labor?

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

Q: Which of the following statements is not correct concerning multiple ?overhead rate systems A…

A: The multiple overhead rate system is the one where different departments have their own rates of…

Q: Which of the following statements about using a plantwide overhead rate based on direct labor is…

A: Plantwide overhead rate based on direct labour means overhead rate to be calculated which is based…

Q: Why do companies use predetermined rather than actual manufacturing overhead rates?

A: Manufacturing overhead means indirect costs that are incurred for manufacturing of products and…

Q: What are the differences between Underapplied Factory Overhead and Overapplied Factory Overhead?

A: Overhead: Overhead cost means expenses referred to indirect cost. The overhead cost like rent,…

Q: Discuss why businesses apply overhead to projects using predefined (factory) rates rather than real…

A: This question deals with predefined (factory) rates and real manufacturing overhead expenses.

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: Which of the following is an important feature when considering the use of a single plantwide…

A: Overheads are considered as fixed and common expenses that should be allocated to the products on…

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

A: The Answer

Q: Explain how fixed manufacturing overhead costs are shifted from one period to another under…

A: Absorption Costing:   It is a type of costing where all the manufacturing costs are absorbed by the…

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: Which of the following is NOT an element of manufacturing overhead? Sales manager's salary Plant…

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

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: When used as the denominator in the calculation of an overhead rate, which of the following will…

A: Capacity or activity level helps to determine the maximum or ideal level at which production can be…

Q: Why are some manufacturing firms switching from direct-labor hours to machine hours or throughput…

A: Direct labor: Direct labor includes the wages of the employees who are directly involved in…

Q: Why aren’t actual manufacturing overhead costs traced to jobs just as direct materials and…

A: Manufacturing costs can be divided into two categories based on its allocation; direct costs,…

Q: Describe how a single plantwide overhead allocation rate is used.

A: Cost: It refers to the economic value incurred by a company to produce a product or a service.

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

A:

Q: Why is the cost of idle time treated as manufacturing overhead?

A:

Q: In an effort to simplify the multiple production department factory overhead rate method, the same…

A: Multiple production department factory overhead method identifies different departments in the…

Q: Describe the two-stage process associated with plantwide overhead rates.

A: Cost accounting is the branch of accounting that inspects the cost structure of a business. This…

Q: Why would a manufactury company with multiple production department still prefrer to use a single…

A: Following are the reasons that a manufacturing company having multiple production departments use a…

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…

Q: Use of a plantwide factory overhead rate assumes that the activities causing overhead costs are the…

A: Introduction:Plantwide factory overhead rate: The rate at which overheads are allocated to all the…

Q: Under what conditions might a company use activity-based costing to allocate factory overhead to…

A:

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

A:

Q: A plantwide factory overhead rate assumes that all overhead is directly related to one activity…

A: Factory Overhead rate:Factory overhead is the indirect cost consisting of indirect material,…

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.