5 Why may departmental overhead rates NOT correctly assign overhead costs? Select one: a. Because of the high correlation between direct labour hours and the incurrence of overhead costs. b. Because of the use of direct labour hours in allocating overhead costs to products rather than machine time or quantity of materials. c. Because of the over-reliance on volume as a basis for allocating overhead costs where products differ regarding the number of units produced, lot size, or complexity of production. d. Because of the difficulties associated with identifying cost pools for the first stage of the allocation process.
5 Why may departmental overhead rates NOT correctly assign overhead costs? Select one: a. Because of the high correlation between direct labour hours and the incurrence of overhead costs. b. Because of the use of direct labour hours in allocating overhead costs to products rather than machine time or quantity of materials. c. Because of the over-reliance on volume as a basis for allocating overhead costs where products differ regarding the number of units produced, lot size, or complexity of production. d. Because of the difficulties associated with identifying cost pools for the first stage of the allocation process.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
5
Why may departmental
Select one:
a. Because of the high correlation between direct labour hours and the incurrence of overhead costs.
b. Because of the use of direct labour hours in allocating overhead costs to products rather than machine time or quantity of materials.
c. Because of the over-reliance on volume as a basis for allocating overhead costs where products differ regarding the number of units produced, lot size, or complexity of production.
d. Because of the difficulties associated with identifying cost pools for the first stage of the allocation process.
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