Using a plantwide factory overhead rate distorts product costs when: Question 12

Question

Using a plantwide factory overhead rate distorts product costs when:
Question 12 options:
products require different ratios of allocation-base usage in each production department
significant differences exist in the factory overhead rates used across different production departments
both A and B are true
neither A nor B are true


Given the following information, determine the activity rate for setups.

Activity Pool Activity Base Budgeted Amount
Setups 10,000 $60,000
Inspections 24,000 $120,000
Assembly (DLH) 80,000 $400,000
Question 13 options:
$58.00
$6.00
$.75
$5.09

Which of the following does not support managerial decisions involving accurate product costing?
Question 15 options:
product constraints
emphasis of a product line
product mix
product price

Explanation / Answer

Solution:

Question 12

products require different ratios of allocation-base usage in each production department
significant differences exist in the factory overhead rates used across different production departments
both A and B are true
neither A nor B are true

Question 13

$58.00
$6.00
$.75
$5.09

Question 15

product constraints
emphasis of a product line
product mix
product price

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