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?
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?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Requirement 2. Consider two types of
overhead costs using machine-hours as the only allocation base. How, if at all, would the machines be miscosted? Briefly explain why.
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 The complex
batches will use
batch-level overhead resources compared to the simple
batches. In addition, the complex machine will use
overhead resources because it is complex.
elliptical
machine made in
▼
few
many
▼
significantly less
significantly more
the same
elliptical
machine that is made in
▼
few
many
▼
less
more
▼
facility-sustaining
product-sustaining
Because
,
if
▼
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
Roberta
uses only machine-hours to allocate overhead costs to
elliptical
machines.As a result, the complex
and the simple machine will be
.
elliptical
machine will be
▼
overcosted
properly costed
undercosted
▼
overcosted
properly costed
undercosted
Requirement 3. How is the cost hierarchy helpful to
Roberta
in managing its business?Expert Solution
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