Accounting 102 Chapter Four

Overhead costs are indirect costs so assigning these costs to products requires an allocation method.

• True

• False

Product costs consist of direct labor, direct materials, and overhead(indirect) costs.

• True

• False

Which type of overhead allocation methods result in the use of more than one overhead rate during the same time period?

• Activity-based costing and plantwide overhead rate method

• Departmental overhead rate method and activity-based costing

• Plantwide overhead rate method and departmental overhead rate method.

• Cost pool overhead rate method and plantwide overhead rate method.

Which of the following would not be considered a product cost?

• Manufacturing overhead costs

• Factory line worker's salary

• cost accountant's salary

• Direct Labor Costs

• Factory Supervisor's salary

The cost to heat a manufacturing facility can be directly linked to the number of units produced.

• True

• False

Departments are the cost objects when the plantwide overhead rate method is used.

• True

• False

The cost object of the plantwide overhead rate method is

• The unit of product

• The time period

• The production activities of the company

• Manufacturing cost pools

• The production departments of the company

What is the reason for pooling costs?

• It simplifies departmental overhead costing procedures

• Determining a pool rate for all costs incurred by the same activity reduces the number of costs assignments required

• It is a budgeting technique designed to accurately track fixed costs

• This procedure helps to determine which costs are directly related to production volume

• To shift costs from low-volume to high-volume products

The pantwide overhead rate is total plantwide allocation base divided by total budgeted plantwide overhead costs.

• True

• False

Which of the following costing systems is more accurate for overhead cost allocation and most likely to allow managers the ability to make better pricing decisions?

• Direct costing

• Plantwide overhead rate

• Activity-based costing

• Departmental overhead allocation rates

• Traditional costing system