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. C. direct labor hours may decrease the effect of technological advances. D. direct labor hours may increase the effect of technological advances.

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. C. direct labor hours may decrease the effect of technological advances. D. direct labor hours may increase the effect of technological advances.

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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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
Traditional overhead allocations result in which of the following situations? a. Overhead costs are assigned as period costs to manufacturing operations. b. High-volume products are assigned too much overhead, while low-volume products are assigned too little overhead. c. Low-volume products are assigned too much overhead, while high-volume products are assigned too little overhead. d. The resulting allocations cannot be used for financial reports.
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
Traditional overhead allocations result in which of the following situations? Group of answer choices High-volume products are assigned too much overhead, and low-volume products are assigned too little overhead. The resulting allocations cannot be used for financial reports. Overhead costs are assigned as period costs to manufacturing operations. Low-volume products are assigned too much, and high-volume products are assigned too little overhead.
If the predetermined overhead rate is based on the estimated level of activity for the current period, then products will be charged only for the capacity that they use and will not be charged for the capacity they don't use. True or False True False
Which of the following are true regarding activity-basedcosting? a. A primary goal of using ABC is a more useful alloca-tion of manufacturing overhead to product lines. b. Under ABC, direct labor hours are never used to allo-cate overhead costs to activity pools or product lines. c. The use of ABC is indicated when it is suspected thateach of a firm’s product lines consumes approximatelythe same amount of overhead resources but the current allocation scheme assigns each line a substantially dif-ferent amount.
Underapplied factory overhead results when? a. A plant is operated at less than its normal capacity. b. Factory overhead costs incurred are greater than the costs charged to production. c. Factory overhead costs incurred is less than the costs charged to production. d. Factory overhead costs incurred are unreasonably large in relation to the number of units produced
1. Costs that do not change with the change in the level of production for some time is classified as ________. variable costs fixed costs mixed costs None of these choices are correct. 2. Under variable costing, the cost of goods manufactured consists of all except direct materials. direct labor. variable factory overhead. fixed factory overhead. 3. Costs that have characteristics of both a variable cost and a fixed cost are classified as ________. variable costs fixed costs mixed costs None of these choices are correct.
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
If the activities causing overhead costs are different across different departments and products, use of a plantwide factory overhead rate will cause distorted product costs. True False
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 plantwiderates to assign cost accurately.
Under traditional costing systems, which calculate a single predetermined overhead rate using volume-based drivers, the product margin of high-volume products tends to be: a. Overstated b. Understated C. Accurately calculated d. None of the answers given e. Cannot be judged due to insufficient information