Requirement 2. Consider two types of elliptical machines made by Roberta​, Inc. One​ machine, designed for professional​ use, is complex to make and is produced in many batches. The other machine is simple to make and is produced in few batches. Suppose that Roberta needs the same number of​ machine-hours to make each type of elliptical machine and that Roberta allocates all overhead costs using​ machine-hours as the only allocation base.​ How, if at​ all, would the machines be​ miscosted? Briefly explain why.   The complex elliptical machine made in ▼   few many batches will use ▼   significantly less significantly more the same ​batch-level overhead resources compared to the simple elliptical machine that is made in ▼   few many batches. In​ addition, the complex machine will use ▼   less more ▼   facility-sustaining product-sustaining overhead resources because it is complex. Because ▼   each elliptical machine requires the same amount of machine-hours the complex machine requires significantly more machine-hours than the simple machine the simple machine requires significantly more machine-hours than the complex machine ​, ▼   both the simple and the complex machines will be allocated the same amount of overhead costs per machine the complex elliptical machine will be allocated a greater amount of overhead costs per machine than the simple machine the simple machine will be allocated a greater amount of overhead costs per machine than the complex machine if Roberta uses only​ machine-hours to allocate overhead costs to elliptical machines. As a​ result, the complex elliptical machine will be ▼   overcosted properly costed undercosted and the simple machine will be ▼   overcosted properly costed undercosted . Requirement 3. How is the cost hierarchy helpful to Roberta in managing its​ business?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Requirement 2. Consider two types of
elliptical
machines made by
Roberta​,
Inc. One​ machine, designed for professional​ use, is complex to make and is produced in many batches. The other machine is simple to make and is produced in few batches. Suppose that
Roberta
needs the same number of​ machine-hours to make each type of
elliptical
machine and that
Roberta
allocates all overhead costs using​ machine-hours as the only allocation base.​ How, if at​ all, would the machines be​ miscosted? Briefly explain why.
 
The complex
elliptical
machine made in
 
few
many
batches will use
 
significantly less
significantly more
the same
​batch-level overhead resources compared to the simple
elliptical
machine that is made in
 
few
many
batches. In​ addition, the complex machine will use
 
less
more
 
facility-sustaining
product-sustaining
overhead resources because it is complex.
Because
 
each elliptical machine requires the same amount of machine-hours
the complex machine requires significantly more machine-hours than the simple machine
the simple machine requires significantly more machine-hours than the complex machine
​,
 
both the simple and the complex machines will be allocated the same amount of overhead costs per machine
the complex elliptical machine will be allocated a greater amount of overhead costs per machine than the simple machine
the simple machine will be allocated a greater amount of overhead costs per machine than the complex machine
if
Roberta
uses only​ machine-hours to allocate overhead costs to
elliptical
machines.
As a​ result, the complex
elliptical
machine will be
 
overcosted
properly costed
undercosted
and the simple machine will be
 
overcosted
properly costed
undercosted
.
Requirement 3. How is the cost hierarchy helpful to
Roberta
in managing its​ business?
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