Question

Which of the following circumstances does NOT favor departmental overhead rates?

		Each department incurs different types and amounts of manufacturing overhead.
		All departments incur approximately equal types and amounts of manufacturing overhead.
		Each product or job uses the departments to a different extent.
		All of the above favor departmental overhead rates.

QUESTION 10

Which of the following refers to using refined cost information to make decisions that increase profits while satisfying customers' needs?

		Traditional costing
		Activity-based costing
		Activity-based management
		Departmental costing

Answer 1

1. Which of the following circumstances does not favor departmental overhead rate?

Answer: all Departments incur approximately equal types and amounts of manufacturing overhead.

Overheads are the indirect expense incurred in the factory during the producing the product. overhead cost is allocated based on departmental overheads rate. the departmental overhead rate is decided based on the cost driver. cost driver may be anything, machine hours, direct labor ect.,

Manufacturing overheads are the indirect factory expenses incurred in production. manufacturing overheads are not allocated equally, for all departments. these costs are different for different departments.

2. Which of the following refer to using the refine cost information to make decisions to that increase profit while satisfying customer needs.

Answer: Activity-Based management

Activity Based Mangement prefer the customer satisfaction while doing the business. Does it take the cost information from the activity-based costing to take the optimal decision to increase profile while satisfying the customer needs?