Mngerial Acct Exam 2 Flashcards
Describe Activity based costing
- uses more than one rate to allocate overhead costs to products
- Typically uses the most overhead allocation rates
- Focuses on the costs of carrying out activites
Describe plantwide overhead rate method
Uses only volume based measure such as direct labor hours to allocate overhead costs to products
Describe departmental overhead rate method
uses more than one rate to allocate overhead costs to products
uses only volume based measures such as direct labor hours to allocate OH costs to products
Which costing method assumes al products use OH costs in the same proportion
plantwide
which of the following would not be used in computing plantwide OH rates: DL hours # of quality inspections DL dollars Machine hours
of quality inspections
With ABC, over head costs should b traced to which cost object first?
activities
variable costing
where DM, DL, and variable OH costs are included in product costs;
fiexed overhead goes to period expenses
Absoption costing
Where DM, DL, and Variable and Fixed OH are included in product costs
How do variable costs react to change in production?
variable costs change in proportion to changes in volume of activity
variable costs per unit remain constant as volume changes
How do fixed costs react to change in production?
FC do not change when the volume of activity changes
FC.unit decrease as volume increases
Mixed cross is ___ when it equal zero
fixed costs; MC>0
