Which of the Following Statements Is False About Joint Manufacturing

question 117

Multiple Choice

Which of the following statements is false about joint manufacturing processes?

• A)Joint costs are by definition inseparable.
• B)Companies producing joint products often allocate joint costs to individual products.
• C)Product costs are more accurate if joint costs are allocated to individual products.
• D)Joint manufacturing processes are simple and rarely require careful attention from managers when analyzing and interpreting product costs that include joint costs.

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Definitions:

Predetermined Overhead Rate

A rate calculated at the beginning of a period, based on the estimated overhead costs and estimated level of activity, used to apply overhead costs to products.

Activity-Based Costing

A costing method that assigns overhead and indirect costs to related products and services based on the actual consumption of resources.

Traditional System

A cost accounting system that allocates overhead based on a single or few measures of activity, such as direct labor hours or machine hours.

Predetermined Overhead Rate

A rate used to apply manufacturing overhead to products, calculated before the period begins based on estimated costs and activity levels.