The situation in which cost distortion is more likely to occur.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 4, Problem 1QC

To determine

To identify: The situation in which cost distortion is more likely to occur.

Expert Solution & Answer

Answer to Problem 1QC

Option b. Cost distortion is more likely to occur when departments incur different types of overhead and the products or jobs use the department to a different extent.

Explanation of Solution

Cost distortion occurs when some products or jobs are overcosted while others are undercosted under simple allocation system. And this occurs because department incur different types of overhead and the products or jobs use the department resources in different quantities.

a.

A company manufactures one type of product: This is an incorrect option as the cost distortion does not occur when there is a single product manufactured by the entity.

b.

Departments incur different types of overhead and the products or jobs use the department to a different extent: This option is correct because cost distortion is the result of different types of overheads incurred by various departments.

c.

A company uses departmental overhead rates rather than a single plantwide overhead rate: This option is incorrect as the use of departmental overhead rate in the place of the single plantwide overhead rate will not distort the cost in any manner.

d.

All products require the same amount and type of processing activities: Cost distortion will not take place if the amounts of all products are same and type of processing activities is also same. Hence, the choice is incorrect.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Given the following cost and activity observations for Smithson Company's utilities, use the high-low method to calculate Smithson's fixed costs per month. Machine Hours Cost January $81,820 9,600 February 144,460 18,300 March 103,080 12,500 April a. $21,600 b. $40,600 c. $10,200 d. $12,700 120,230 14,900

The supervisor at Golden Harvest Restaurant reviewed the daily food waste report. According to company policy, waste should not exceed 4% of daily food cost. With total food costs of $8,500, actual waste recorded was $425. Management requires the variance from acceptable waste limit to be calculated for performance review. Need answer

Finch, Inc., purchases 1,000 shares of Bluebird Corporation stock on October 3, 2017, for $400,000. On December 12, 2017, Finch purchases an additional 750 shares of Bluebird stock for $280,000. According to market quotations, Bluebird stock is selling for $400 per share on 12/31/17. Finch sells 500 shares of Bluebird stock on March 1, 2018, for $224,000. What is Finch's recognized gain or loss from the sale of Bluebird stock on March 1, 2018, assuming the shares sold are from the shares purchased on December 12, 2017? In your computations, round the per share amount to the nearest whole dollar, and use the rounded amount in subsequent computations.

Answer 2

Question

Chapter 4, Problem 1QC

To determine

To identify: The situation in which cost distortion is more likely to occur.

Expert Solution & Answer

Answer to Problem 1QC

Option b. Cost distortion is more likely to occur when departments incur different types of overhead and the products or jobs use the department to a different extent.

Explanation of Solution

Cost distortion occurs when some products or jobs are overcosted while others are undercosted under simple allocation system. And this occurs because department incur different types of overhead and the products or jobs use the department resources in different quantities.

a.

A company manufactures one type of product: This is an incorrect option as the cost distortion does not occur when there is a single product manufactured by the entity.

b.

Departments incur different types of overhead and the products or jobs use the department to a different extent: This option is correct because cost distortion is the result of different types of overheads incurred by various departments.

c.

A company uses departmental overhead rates rather than a single plantwide overhead rate: This option is incorrect as the use of departmental overhead rate in the place of the single plantwide overhead rate will not distort the cost in any manner.

d.

All products require the same amount and type of processing activities: Cost distortion will not take place if the amounts of all products are same and type of processing activities is also same. Hence, the choice is incorrect.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 4, Problem 1QC

To determine

To identify: The situation in which cost distortion is more likely to occur.

Expert Solution & Answer

Answer to Problem 1QC

Option b. Cost distortion is more likely to occur when departments incur different types of overhead and the products or jobs use the department to a different extent.

Explanation of Solution

Cost distortion occurs when some products or jobs are overcosted while others are undercosted under simple allocation system. And this occurs because department incur different types of overhead and the products or jobs use the department resources in different quantities.

a.

A company manufactures one type of product: This is an incorrect option as the cost distortion does not occur when there is a single product manufactured by the entity.

b.

Departments incur different types of overhead and the products or jobs use the department to a different extent: This option is correct because cost distortion is the result of different types of overheads incurred by various departments.

c.

A company uses departmental overhead rates rather than a single plantwide overhead rate: This option is incorrect as the use of departmental overhead rate in the place of the single plantwide overhead rate will not distort the cost in any manner.

d.

All products require the same amount and type of processing activities: Cost distortion will not take place if the amounts of all products are same and type of processing activities is also same. Hence, the choice is incorrect.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 4, Problem 1QC

To determine

To identify: The situation in which cost distortion is more likely to occur.

Expert Solution & Answer

Answer to Problem 1QC

Option b. Cost distortion is more likely to occur when departments incur different types of overhead and the products or jobs use the department to a different extent.

Explanation of Solution

Cost distortion occurs when some products or jobs are overcosted while others are undercosted under simple allocation system. And this occurs because department incur different types of overhead and the products or jobs use the department resources in different quantities.

a.

A company manufactures one type of product: This is an incorrect option as the cost distortion does not occur when there is a single product manufactured by the entity.

b.

Departments incur different types of overhead and the products or jobs use the department to a different extent: This option is correct because cost distortion is the result of different types of overheads incurred by various departments.

c.

A company uses departmental overhead rates rather than a single plantwide overhead rate: This option is incorrect as the use of departmental overhead rate in the place of the single plantwide overhead rate will not distort the cost in any manner.

d.

All products require the same amount and type of processing activities: Cost distortion will not take place if the amounts of all products are same and type of processing activities is also same. Hence, the choice is incorrect.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 4, Problem 1QC

To determine

To identify: The situation in which cost distortion is more likely to occur.

Expert Solution & Answer

Answer to Problem 1QC

Option b. Cost distortion is more likely to occur when departments incur different types of overhead and the products or jobs use the department to a different extent.

Explanation of Solution

Cost distortion occurs when some products or jobs are overcosted while others are undercosted under simple allocation system. And this occurs because department incur different types of overhead and the products or jobs use the department resources in different quantities.

a.

A company manufactures one type of product: This is an incorrect option as the cost distortion does not occur when there is a single product manufactured by the entity.

b.

Departments incur different types of overhead and the products or jobs use the department to a different extent: This option is correct because cost distortion is the result of different types of overheads incurred by various departments.

c.

A company uses departmental overhead rates rather than a single plantwide overhead rate: This option is incorrect as the use of departmental overhead rate in the place of the single plantwide overhead rate will not distort the cost in any manner.

d.

All products require the same amount and type of processing activities: Cost distortion will not take place if the amounts of all products are same and type of processing activities is also same. Hence, the choice is incorrect.

Answer 6

Chapter 4, Problem 1QC

To determine

To identify: The situation in which cost distortion is more likely to occur.

Expert Solution & Answer

Answer to Problem 1QC

Option b. Cost distortion is more likely to occur when departments incur different types of overhead and the products or jobs use the department to a different extent.

Explanation of Solution

Cost distortion occurs when some products or jobs are overcosted while others are undercosted under simple allocation system. And this occurs because department incur different types of overhead and the products or jobs use the department resources in different quantities.

a.

A company manufactures one type of product: This is an incorrect option as the cost distortion does not occur when there is a single product manufactured by the entity.

b.

Departments incur different types of overhead and the products or jobs use the department to a different extent: This option is correct because cost distortion is the result of different types of overheads incurred by various departments.

c.

A company uses departmental overhead rates rather than a single plantwide overhead rate: This option is incorrect as the use of departmental overhead rate in the place of the single plantwide overhead rate will not distort the cost in any manner.

d.

All products require the same amount and type of processing activities: Cost distortion will not take place if the amounts of all products are same and type of processing activities is also same. Hence, the choice is incorrect.

Answer 7

Chapter 4, Problem 1QC

To determine

To identify: The situation in which cost distortion is more likely to occur.

Answer 8

Expert Solution & Answer

Answer to Problem 1QC

Option b. Cost distortion is more likely to occur when departments incur different types of overhead and the products or jobs use the department to a different extent.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Explanation of Solution

Cost distortion occurs when some products or jobs are overcosted while others are undercosted under simple allocation system. And this occurs because department incur different types of overhead and the products or jobs use the department resources in different quantities.

a.

A company manufactures one type of product: This is an incorrect option as the cost distortion does not occur when there is a single product manufactured by the entity.

b.

Departments incur different types of overhead and the products or jobs use the department to a different extent: This option is correct because cost distortion is the result of different types of overheads incurred by various departments.

c.

A company uses departmental overhead rates rather than a single plantwide overhead rate: This option is incorrect as the use of departmental overhead rate in the place of the single plantwide overhead rate will not distort the cost in any manner.

d.

All products require the same amount and type of processing activities: Cost distortion will not take place if the amounts of all products are same and type of processing activities is also same. Hence, the choice is incorrect.