A company may use multiple overhead rates because some departments are labor intensive whereas other departments are machine intensive.

It is possible for units in the beginning Work-in-Process Inventory to also be part of the ending Work-in-Process Inventory True or False True False Activity-based costing is based on the concept that products produce activities and activities produce resources. True or False True False

Departmental overhead rates applied based on a volume measure such as direct labour-hours or machine-hours will eliminate any distortions in unit costs due to product diversity. true or false

Accounting Direct labor or machine hours may not be the appropriate cost driver for overhead in all areas of manufacturing due to the complexities of many manufacturing processes. Many companies use activity-based costing (ABC) which uses multiple drivers (items that consume resources) rather than just one driver to apply overhead to their activities. With ABC, a company can use a cost driver that has a direct cause/effect relationship in its applied overhead costs. Waterways looked into ABC as a method of costing because of the variety of items it produces and the many different activities in which it is involved. The activities listed below area sample of possible cost pools for Waterways. Assembling Payroll Billing Plant supervision Digging trenches Product design Janitorial Purchasing materials Machine maintenance Selling Machine setups Testing Molding Welding Packaging Using the following information, determine the overhead rates and the actual cost assigned for each of the…