Joey just starting an accounting position specializing in cost allocations. He determined that in the past, the predetermined overhead rate was only based on estimated fixed overhead costs, it did not include estimated variable overhead costs. 1. How does the omission of the variable overhead costs affect the per-determined overhead rate? 2. How does the omission of the variable overhead costs affect the cost per unit?

Joey just starting an accounting position specializing in cost allocations. He determined that in the past, the predetermined overhead rate was only based on estimated fixed overhead costs, it did not include estimated variable overhead costs. 1. How does the omission of the variable overhead costs affect the per-determined overhead rate? 2. How does the omission of the variable overhead costs affect the cost per unit?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Joey just starting an accounting position specializing in cost allocations. He determined that in the past, the predetermined overhead rate was only
based on estimated fixed overhead costs, it did not include estimated variable overhead costs.
1. How does the omission of the variable overhead costs affect the per-determined overhead rate?
2. How does the omission of the variable overhead costs affect the cost per unit?

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