Why is it better to use separate overhead rates? * A. Some departments are labor-intensive, some are machine-intensive. B. Labor rates vary considerably among departments. C. The resulting overhead rates are all about the same. D. All jobs require about the same percentage of time in all departments.

Why is it better to use separate overhead rates? * A. Some departments are labor-intensive, some are machine-intensive. B. Labor rates vary considerably among departments. C. The resulting overhead rates are all about the same. D. All jobs require about the same percentage of time in all departments.

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter18: Activity-based Costing

Section: Chapter Questions

Problem 2DQ: Why would a manufacturing company with multiple production departments still prefer to use a single...

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If the activities that generate overhead costs vary between departments and products, adopting a plantwide manufacturing overhead rate would result in skewed product costs.True \sFalse
Online A company may use multiple overhead rates because some departments are labor intensive whereas other departments are machine intensive. True or False True False
One of the disadvantages of the departmental and the plantwide overhead rate methods is that OA. technological advances may decrease the effect of direct labor hours as a percentage of total manufacturing costs. B. technological advances may increase direct labor hours as a percentage of total manufacturing costs. OC. direct labor hours may decrease the effect of technological advances. OD. direct labor hours may increase the effect of technological advances.
Why would a manufacturing company with multiple production departments still prefer to use a single plantwide overhead rate?
Why would a manufacturing company with multiple production departments still prefer to use a single plantwide overhead rate?
Which of the following statements is true? 1. Departmental overhead rates will correctly assign overhead costs in situations where a company has a range of products that differ in volume, lot size, or complexity of production. 2. When a company implements activity-based costing, manufacturing overhead cost is often shifted from low volume products to high volume products, with a higher unit cost resulting for the high volume products. 3. Organization-sustaining activities are carried out regardless of which customers are served, which products are produced, how many batches are run, or how many units are made.
What do you think are some advantages for using the ABC method versus a single plant-wide rate or multiple departmental overhead rates. Why would an activity-based costing (ABC) system appeal to some companies and not all companies. Provide at least 3 examples of companies you think would and wouldn't want to use the ABC method.
A stapler manufacturer uses a single plantwide predetermined overhead allocation rate to allocate its indirect costs. The CFO thinks this process could be inaccurate. Which of the following statement is incorrect, if the manufacture makes the transition to using multiple predetermined overhead allocation rates? A. The allocation process changes because there are now multiple cost pools and multiple allocation bases. B. Management must analyze the expected overhead costs and separate them into a cost pool for each department. C. In selecting machine usage as the primary cost driver for the Production Department, management feels that there is a direct relationship between the number of machine hours used and the amount of overhead costs incurred. D. The use of multiple predetermined overhead allocation rates is more complex, but it may be more accurate.
If the single plantwide overhead rate is the easiest method to allocate support department costs to production departments, why would a company use a more complicated method?
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 е. more complex than a system based on a single plantwide overhead rate.
Which of the following statements is not correct concerning multiple overhead rate systems? a. None of the given answers. b. A multiple overhead rate system is more complex than a system based on a single plantwide overhead rate. C. A company may choose to create a separate overhead rate for each of its production departments. С. d. A multiple overhead rate system is usually more accurate than a system based on a single plantwide overhead rate. е. In departments that are relatively labor-intensive, their overhead costs should be applied to jobs based on direct labor-hours rather than on machine-hours.
When production departments differ significantly in their manufacturing processes, factory overhead costs may be more accurately allocated using which of the following? a.Single plantwide factory overhead rates b.Multiple production department overhead rates c.Contribution margin d.Contribution margin ratio