Which of the Following Accurately Describes Advantages and Disadvantages of Employing

question 5

Multiple Choice

Which of the following accurately describes advantages and disadvantages of employing a system of allocation that uses a plant-wide rate?

• A)The plant-wide rate approach is the simplest to apply, but it is also the most costly to implement.
• B)The plant-wide rate approach is the simplest to apply, but most likely provides the least accurate product costs.
• C)The plant-wide rate may be straightforward, but it is not appropriate for small businesses that offer a single service or product.
• D)The plant-wide rate really offers no advantage whatsoever.

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Definitions:

Periodic Inventory Systems

Periodic Inventory Systems are accounting methods that calculate the inventory at the end of an accounting period to determine cost of goods sold and ending inventory.

Perpetual Inventory Systems

Inventory accounting method that continuously tracks inventory levels and updates accounting records for each purchase and sale.

Inventory Records

Inventory records are detailed lists or databases that track the quantities, locations, and statuses of products or materials that a company holds in stock.

Cost Of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including the cost of the materials and labor directly used to create the product.