1) When overhead allocated to every product using the same : 1876939
1) When overhead is allocated to every product using the same manufacturing overhead rate, this rate is called the departmental overhead rate.
2) With increased competition, managers need more accurate estimates of product costs in order to set prices and to identify the most profitable products.
3) The plantwide overhead cost allocation rate is computed by dividing the estimated total manufacturing overhead costs by the estimated total quantity of the cost allocation base.
4) To determine the amount of overhead allocated, the overhead rate is divided by the cost driver.
5) Using departmental overhead rates is generally less accurate than using a single plantwide overhead rate.
6) Cost distortion occurs when some products are overcosted while other products are undercosted by the cost allocation system.
7) As a result of cost distortion, some products will be overcosted while other products will be undercosted.
8) Companies often refine their cost allocation systems to minimize the amount of cost distortion caused by the simpler cost allocation systems.
9) Companies that use departmental overhead rates trace direct materials and direct labor to cost objects just as they would in a traditional costing system.
10) Only manufacturers can use refined costing systems to allocate manufacturing overhead.