Which of the following is true? Select one:a. Overhead costs are often affected by many issues and are frequently too complex to be explained by any one factor. b. The departmental overhead rate is not usually based on measures closely related to production volume. c. The departmental overhead rate is most accurate in assigning overhead costs that are not driven by production volume. d. Allocated overhead costs will be the same no matter which allocation method is used. e. When cost analysts are able to logically trace cost objects to costs, costing accuracy is improved.

Question

Imani

Business

21 November, 13:42

Which of the following is true? Select one:a. Overhead costs are often affected by many issues and are frequently too complex to be explained by any one factor. b. The departmental overhead rate is not usually based on measures closely related to production volume. c. The departmental overhead rate is most accurate in assigning overhead costs that are not driven by production volume. d. Allocated overhead costs will be the same no matter which allocation method is used. e. When cost analysts are able to logically trace cost objects to costs, costing accuracy is improved.

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Ryland Carlson · Answer 1

e. When cost analysts are able to logically trace cost objects to costs, costing accuracy is improved.

Explanation:

Overhead costs are costs which can not be attributed to a particular item. So it is distributed among more than one item on some basis.

For example electricity cost is a common overhead in a company having two machines one producing pen and the other producing paper. The overhead electricity cost can be scientifically apportioned in the cost analysis of pen and paper on the basis of wattage capacity of machines used in the manufacture of pen and paper.