Financial & Managerial Accounting
14th Edition
ISBN: 9781337119207
Author: Carl Warren, James M. Reeve, Jonathan Duchac
Publisher: Cengage Learning
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Textbook Question
Chapter 18, Problem 2DQ
Why would a manufacturing company with multiple production departments still prefer to use a single plantwide
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If the single plantwide overhead rate is the easiest method to allocate support department costs to production departments, why would a company use a more complicated method?
What is a plantwide overhead rate? Why are multiple overhead rates, rather than a plantwide overhead rate, used in some companies?
Why would someone choose the multiple production department FOH rate method when it is more complicated to calculate than the single plantwide rate?
Chapter 18 Solutions
Financial & Managerial Accounting
Ch. 18 - Why would management be concerned about the...Ch. 18 - Why would a manufacturing company with multiple...Ch. 18 - How do the multiple production department and the...Ch. 18 - Under what two conditions would the multiple...Ch. 18 - Prob. 5DQCh. 18 - Prob. 6DQCh. 18 - Prob. 7DQCh. 18 - Under what circumstances might the activity-based...Ch. 18 - Prob. 9DQCh. 18 - Prob. 10DQ
Ch. 18 - Single plantwide factory overhead rate The total...Ch. 18 - Multiple production department factory overhead...Ch. 18 - Activity-based costing: factory overhead costs The...Ch. 18 - Activity-based costing: selling and administrative...Ch. 18 - Activity-based costing for a service business...Ch. 18 - Single plantwide factory overhead rate Nixon...Ch. 18 - Single plantwide factory overhead rate Mozart...Ch. 18 - Single plantwide factory overhead rate Sally...Ch. 18 - Product costs and product profitability reports,...Ch. 18 - Multiple production department factory overhead...Ch. 18 - Single plantwide and multiple production...Ch. 18 - Single plantwide and multiple production...Ch. 18 - Identifying activity bases in an activity-based...Ch. 18 - Product costs using activity rates Nozama.com Inc....Ch. 18 - Product costs using activity rates Atlas...Ch. 18 - Activity rates and product costs using...Ch. 18 - Activity cost pools, activity rates, and product...Ch. 18 - Activity-based costing and product cost distortion...Ch. 18 - Multiple production department factory overhead...Ch. 18 - Activity-based costing and product cost distortion...Ch. 18 - Single plantwide rate and activity-based costing...Ch. 18 - Evaluating selling and administrative cost...Ch. 18 - Construct and interpret a product profitability...Ch. 18 - Activity-based costing and customer profitability...Ch. 18 - Activity-based costing for a service company...Ch. 18 - Activity-based costing for a service company...Ch. 18 - Single plantwide factory overhead rate Orange...Ch. 18 - Multiple production department factory overhead...Ch. 18 - Activity-based and department rate product costing...Ch. 18 - Activity-based product costing Mello Manufacturing...Ch. 18 - Allocating selling and administrative expenses...Ch. 18 - Product costing and decision analysis for a...Ch. 18 - Single plantwide factory overhead rate Spoiled Cow...Ch. 18 - Multiple production department factory overhead...Ch. 18 - Activity-based department rate product costing and...Ch. 18 - Activity-based product costing Sweet Sugar Company...Ch. 18 - Allocating selling and administrative expenses...Ch. 18 - Product costing and decision analysis for a...Ch. 18 - Activity-based product cost improvement Gourmet...Ch. 18 - Prob. 2ADMCh. 18 - Production run size and activity improvement...Ch. 18 - Prob. 4ADMCh. 18 - Ethics in Action The controller of Tri Con Global...Ch. 18 - Communication The controller of New Wave Sounds...
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- If the activities that generate overhead costs vary between departments and products, adopting a plantwide manufacturing overhead rate would result in skewed product costs.True \sFalsearrow_forwardWhich of the following companies would be best served by a plantwide overhead rate? Multiple Choice A company that manufactures many different products and whose operations are an equal mix of labor and mechanized work. A company that manufactures many different products and whose operations are highly mechanized. A company whose products differ in batch size and complexity and consume different amounts of overhead resources. A company that manufactures few products and whose operations are labor intensive. A company whose products use overhead resources in very different ways.arrow_forwardWhich of the following is an important feature when considering the use of a single plantwide factory overhead rate? a.It is easy to use. b.It is often inaccurate. c.It is expensive to use. d.It is complex to use.arrow_forward
- How is process costing for a single manufacturing department different from a manufacturing company with multiple departments?arrow_forwardWhat are the distinguishing characteristics of variable, fixed, and semivariable factory overhead costs?arrow_forwardExplain how a plantwide overhead rate, using a unit-based driver, can produce distorted product costs. In your answer, identify two major factors that impair the ability of plantwide rates to assign cost accurately.arrow_forward
- How do the multiple production department and the single plantwide factory overhead rate methods differ?arrow_forwardWhat are some drawbacks of applying support department costs using a single plantwide rate?arrow_forwardWhat do you think are some advantages for using the ABC method versus a single plant-wide rate or multiple departmental overhead rates. Why would an activity-based costing (ABC) system appeal to some companies and not all companies. Provide at least 3 examples of companies you think would and wouldn't want to use the ABC method.arrow_forward
- If the activities causing overhead costs are different across different departments and products, use of a plantwide factory overhead rate will cause distorted product costs. True Falsearrow_forwardWhen production departments differ significantly in their manufacturing processes, factory overhead costs may be more accurately allocated using which of the following? a.Single plantwide factory overhead rates b.Multiple production department overhead rates c.Contribution margin d.Contribution margin ratioarrow_forwardMultiple or departmental overhead rates are considered preferable to a single plantwide overhead rate when which of the following occurs? Group of answer choices individual cost drivers cannot accurately be determined with respect to the cause-and-effect relationships. various products are manufactured that do not pass through the same departments or use the manufacturing processes. manufacturing is limited to a single product flowing through a series of identical processes. cost drivers, such as direct labor hour, are the same for all processes.arrow_forward
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