Manufacturing overhead allocation: Manufacturing overhead cost is the pool of all indirect costs incurred for the production. These are the costs which are not directly traceable to the product. Manufacturing costs include indirect material indirect labor and overheads . These costs are allocated to the products using the overhead allocation rate. The formula for overhead allocation rate is as follows: Overhead allocation rate = Estimated Manufacturing overhead Cost Allocation base Activity Based Costing (ABC): ABC costing method is generally used to allocate the overhead costs to the product using activity rates differently for each activity. Unlike traditional method, the ABC costing method does not use the plant wide overhead rate, rather it used different allocation rate for different production activity. To indicate: Three disadvantages of plant wide overhead allocation rate.

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Answer 1

Question

Chapter 4, Problem 6QS

To determine

Concept introduction:

Manufacturing overhead allocation:

Manufacturing overhead cost is the pool of all indirect costs incurred for the production. These are the costs which are not directly traceable to the product. Manufacturing costs include indirect material indirect labor and overheads. These costs are allocated to the products using the overhead allocation rate. The formula for overhead allocation rate is as follows:

Overhead allocation rate = Estimated Manufacturing overhead CostAllocation base

Activity Based Costing (ABC): ABC costing method is generally used to allocate the overhead costs to the product using activity rates differently for each activity. Unlike traditional method, the ABC costing method does not use the plant wide overhead rate, rather it used different allocation rate for different production activity.

To indicate:

Three disadvantages of plant wide overhead allocation rate.

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Answer 2

Question

Chapter 4, Problem 6QS

To determine

Concept introduction:

Manufacturing overhead allocation:

Manufacturing overhead cost is the pool of all indirect costs incurred for the production. These are the costs which are not directly traceable to the product. Manufacturing costs include indirect material indirect labor and overheads. These costs are allocated to the products using the overhead allocation rate. The formula for overhead allocation rate is as follows:

Overhead allocation rate = Estimated Manufacturing overhead CostAllocation base

Activity Based Costing (ABC): ABC costing method is generally used to allocate the overhead costs to the product using activity rates differently for each activity. Unlike traditional method, the ABC costing method does not use the plant wide overhead rate, rather it used different allocation rate for different production activity.

To indicate:

Three disadvantages of plant wide overhead allocation rate.

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Answer 3

Question

Chapter 4, Problem 6QS

To determine

Concept introduction:

Manufacturing overhead allocation:

Manufacturing overhead cost is the pool of all indirect costs incurred for the production. These are the costs which are not directly traceable to the product. Manufacturing costs include indirect material indirect labor and overheads. These costs are allocated to the products using the overhead allocation rate. The formula for overhead allocation rate is as follows:

Overhead allocation rate = Estimated Manufacturing overhead CostAllocation base

Activity Based Costing (ABC): ABC costing method is generally used to allocate the overhead costs to the product using activity rates differently for each activity. Unlike traditional method, the ABC costing method does not use the plant wide overhead rate, rather it used different allocation rate for different production activity.

To indicate:

Three disadvantages of plant wide overhead allocation rate.

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Answer 4

Question

Chapter 4, Problem 6QS

To determine

Concept introduction:

Manufacturing overhead allocation:

Manufacturing overhead cost is the pool of all indirect costs incurred for the production. These are the costs which are not directly traceable to the product. Manufacturing costs include indirect material indirect labor and overheads. These costs are allocated to the products using the overhead allocation rate. The formula for overhead allocation rate is as follows:

Overhead allocation rate = Estimated Manufacturing overhead CostAllocation base

Activity Based Costing (ABC): ABC costing method is generally used to allocate the overhead costs to the product using activity rates differently for each activity. Unlike traditional method, the ABC costing method does not use the plant wide overhead rate, rather it used different allocation rate for different production activity.

To indicate:

Three disadvantages of plant wide overhead allocation rate.

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Answer 5

Chapter 4, Problem 6QS

To determine

Concept introduction:

Manufacturing overhead allocation:

Manufacturing overhead cost is the pool of all indirect costs incurred for the production. These are the costs which are not directly traceable to the product. Manufacturing costs include indirect material indirect labor and overheads. These costs are allocated to the products using the overhead allocation rate. The formula for overhead allocation rate is as follows:

Overhead allocation rate = Estimated Manufacturing overhead CostAllocation base

Activity Based Costing (ABC): ABC costing method is generally used to allocate the overhead costs to the product using activity rates differently for each activity. Unlike traditional method, the ABC costing method does not use the plant wide overhead rate, rather it used different allocation rate for different production activity.

To indicate:

Three disadvantages of plant wide overhead allocation rate.

Answer 6

Chapter 4, Problem 6QS

To determine

Concept introduction:

Manufacturing overhead allocation:

Manufacturing overhead cost is the pool of all indirect costs incurred for the production. These are the costs which are not directly traceable to the product. Manufacturing costs include indirect material indirect labor and overheads. These costs are allocated to the products using the overhead allocation rate. The formula for overhead allocation rate is as follows:

Overhead allocation rate = Estimated Manufacturing overhead CostAllocation base

Activity Based Costing (ABC): ABC costing method is generally used to allocate the overhead costs to the product using activity rates differently for each activity. Unlike traditional method, the ABC costing method does not use the plant wide overhead rate, rather it used different allocation rate for different production activity.

To indicate:

Three disadvantages of plant wide overhead allocation rate.

Answer 7

Chapter 4, Problem 6QS

To determine

Concept introduction:

Manufacturing overhead allocation:

Manufacturing overhead cost is the pool of all indirect costs incurred for the production. These are the costs which are not directly traceable to the product. Manufacturing costs include indirect material indirect labor and overheads. These costs are allocated to the products using the overhead allocation rate. The formula for overhead allocation rate is as follows:

Overhead allocation rate = Estimated Manufacturing overhead CostAllocation base

Activity Based Costing (ABC): ABC costing method is generally used to allocate the overhead costs to the product using activity rates differently for each activity. Unlike traditional method, the ABC costing method does not use the plant wide overhead rate, rather it used different allocation rate for different production activity.

To indicate:

Three disadvantages of plant wide overhead allocation rate.

Answer 8

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Answer 9

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Answer 10

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Answer 11

Ch. 4 - Prob. 1MCQ Ch. 4 - Prob. 2MCQ Ch. 4 - All of the following are examples of batch-level...Ch. 4 - Prob. 4MCQ Ch. 4 - Prob. 5MCQ Ch. 4 - Why are overhead costs allocated to products and...Ch. 4 - What are three common methods of assigning...Ch. 4 - Why are direct labor hours and machine hours...Ch. 4 - What are the advantages of using a single plant...Ch. 4 - The usefulness of a single plant wide overhead...

Solution Summary: The author explains the ABC costing method used to allocate the overhead costs to the product using activity rates differently for each activity.

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