When overhead is allocated to every product using the same production overhead​ rate, this price is called the departmental overhead rate.

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With increased​ competition, managers need much more accurate approximates of product prices in bespeak to collection prices and to recognize the most profitable products
Using departmental overhead prices is usually less accurate than using a single plantwide overhead rate.
Cost distortion occurs once some commodities are overcosted when other products are undercosted through the price allocation system.
Companies frequently refine their expense allocation solution to minimize the quantity of price distortion caused by the simpler price allocation systems.
Companies that use departmental overhead rates trace direct materials and also direct labor to expense objects simply as they would in a timeless costing system.
Merchandising and service​ companies, and also governmental​ agencies, deserve to use refined price allocation equipment to administer their managers with better cost information.
One problem that favors making use of a departmental overhead​ rate, rather than plantwide overhead​ rates, is that various departments incur different quantities and species of production overhead.
The allocation basic selected for each department should be the expense driver of the costs in the departmental overhead pool.
Direct labor hours would it is in the most appropriate cost allocation base for a Machining Department the uses machine robotics extensively.
ABC generally reasons the the very least amount of cost distortion amongst products because indirect expenses are allocated come the assets based on
Four simple steps are supplied in an alphabet system. List the proper order that these​ steps, i beg your pardon are right now scrambled​ below: a. Recognize the primary activities and calculation a full cost swimming pool for each. B. Allocate the costs to the expense object using the activity cost assignment rates.c. Choose an allocation base for each activity.d. Calculation an task cost allocation rate for each activity.
The use of i m sorry of the following costing systems is most most likely to reduce cost distortion to a​ minimum?
Traditional cost systems with a single−allocation base often tend to overcost high−volume products and also undercost low−volume products as compared to activityms
There will certainly be tiny benefit to using an activity−based costing device when products are vastly various from each other and consume different quantities of resources.

See more: In A Gantt Chart, The Horizontal Axis Is Usually Which Of The Following? ?


Activityminus−based monitoring refers to using activityminus−based expense information to do decisions that may rise profits when satisfying​ customers\" needs.
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