Which of the following statements best describes why the use of a single plantwide rate toallocate manufacturing overhead may distort products costs?O The use of robotics has increased the correlation between direct labor hours and the actual amount ofoverhead costs associated with specific product linesThe practical difficulties of accurately measuring the direct labor hours associated with speciic batches ina job order cest systemO The practical difculties of accurately measuring the machine hours associated with speciic batches in ajob order cost system.O The bookkeeping costs of combining the different types of overhead costs-indirect labor, indirectmaterials and other overhead-into a sinele cost pool.O The increase in overhead costs as a percentage of total manufacturing costs, in concert with an increase inthe diversity of the product ines that companies produce.

SOLUTION FORMULA = PLANTWIDE OVERHEAD RATE = TOTAL OVERHEAD / DIRECT LABOR HOURS.

Which of the following statements best describes why the use of a single plantwide rate to allocate manufacturing overhead may distort products costs? O The use of robotics has increased the corelation between direct labor hours and the actual amount of overhead costs associated with specific product lines O The practical dficulties of accurately measuring the direct labor hours associated with speciic batches in a job order cost system O The practical dficuties of accurately measuring the machine hours associated with speciic batches in a job order cost system. O The bookkeeping costs of combining the diferent types of overhead costs-indirect labor, indirect materials and other overhead-into a sinele cost pool O The increase in overhead costs as a percentage of total manufacturing costs, in concert with an increase in the diversity of the product ines that companies produce

Which of the following statements best describes why the use of a single plantwide rate to allocate manufacturing overhead may distort products costs? O The use of robotics has increased the corelation between direct labor hours and the actual amount of overhead costs associated with specific product lines O The practical dficulties of accurately measuring the direct labor hours associated with speciic batches in a job order cost system O The practical dficuties of accurately measuring the machine hours associated with speciic batches in a job order cost system. O The bookkeeping costs of combining the diferent types of overhead costs-indirect labor, indirect materials and other overhead-into a sinele cost pool O The increase in overhead costs as a percentage of total manufacturing costs, in concert with an increase in the diversity of the product ines that companies produce

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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Concept explainers

Management by Exception

A manager’s job is a very tough one. A manager needs to look at the various areas of work and as a manager he has to look after two or more important jobs or activities at the same time for the growth of the business. In order to do all these things in an effective manner, a manager must adopt or practice different management styles and tactics.

Question

Which of the following statements best describes why the use of a single plantwide rate to
allocate manufacturing overhead may distort products costs?
O The use of robotics has increased the correlation between direct labor hours and the actual amount of
overhead costs associated with specific product lines
The practical difficulties of accurately measuring the direct labor hours associated with speciic batches in
a job order cest system
O The practical difculties of accurately measuring the machine hours associated with speciic batches in a
job order cost system.
O The bookkeeping costs of combining the different types of overhead costs-indirect labor, indirect
materials and other overhead-into a sinele cost pool.
O The increase in overhead costs as a percentage of total manufacturing costs, in concert with an increase in
the diversity of the product ines that companies produce.

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