Which of the Following Is a Drawback in Using a Single

question 103

Multiple Choice

Which of the following is a drawback in using a single plantwide rate to apply overhead to product costs?

• A)Support department costs are not combined with all other overhead costs.
• B)A single driver is used for all overhead costs and it is unlikely that the driver selected is appropriate for every type of overhead.
• C)Some overhead costs are missing from the application process.
• D)Too much emphasis is placed on the fact that manufacturing processes differ from one product to another.

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Definitions:

Labor Per Unit

Refers to the amount of labor required to produce a single unit of a product, indicating efficiency and productivity levels.

Long-run Average Cost Curve

A curve that shows the lowest cost at which a firm can produce any given level of output in the long run, when all inputs are variable.

Monthly Production

The total quantity of goods or services produced by a company, industry, or economy over the span of a month.

Production Cost

The total expense incurred in manufacturing a product or offering a service, including raw materials, labor, and overheads.