Chapter 7 and 8 Overhead costs and activity based costing

Question 1

The plantwide overhead rate

Answer 1

single overhead rate that a company uses to allocate using volume based cost drivers

Question 2

To calculate the predetermined overhead rate (plantwide)

Answer 2

budgeted manufacturing overhead / budgeted activity driver

Question 3

if asked to calculate overhead cost of each product (plantwide)

Answer 3

applied OH = predetermined overhead rate X actual level of cost driver

Question 4

if asked to estimate or calculate overhead cost of each product (applied overhead for plantwide)

Answer 4

applied OH compared to actual manu overhead

Question 5

The departmental overhead rate

Answer 5

assigns overhead costs to production departments and separate overhead rate is calculated for each department to allocate overheads to products

Question 6

The predetermined departmental overhead rate (departmental)

Answer 6

budgeted overhead for department / budgeted level of cost driver in department

Question 7

Aditional Q (for both plantwide deprtmant) calculate cost per unit

Answer 7

prime costs (direct M + L) + overhead costs (what you determined) divided by units produced

Question 8

define activity based costing

Answer 8

manufacturing overhead costs are broken down into activities and are allocated using volume and non volume based cost drivers