If a Department Identifies More Than One Cost Driver for Overhead

question 113

Multiple Choice

If a department identifies more than one cost driver for overhead costs, the department ideally should _____.

• A)put 80% of the cost into one pool and 20% into second pool
• B)select a single cost driver
• C)allocate 80% of the costs with 20% of the drivers
• D)create as many cost pools as there are cost drivers

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Definitions:

Single Product Firm

A company that specializes in the production and sale of one specific product or type of product.

Price Increase

A situation where the selling price of goods or services is raised by a company.

Unit Sales

The volume of product sold, representing a key measure of a company's performance and sales activity.

Variable Expense

Expenses that change in proportion to the amount of goods produced or the volume of sales, like materials or commissions on sales.