Match Each Description Below to the Appropriate Method for Allocating

question 90

Short Answer

Match each description below to the appropriate method for allocating costs (a-c).
-Overhead costs are first directly traced or distributed to support and production departments; support department costs are then allocated to production departments based on the amount of support activity used by each production department.
A)Single plantwide overhead rate
B)Multiple production department rates
C)Activity-based costing

• A)Single plantwide overhead rate
• B)Multiple production department rates
• C)Activity-based costing

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Definitions:

Factory Overhead

Costs associated with the operation of a manufacturing plant that are not directly tied to individual products, such as maintenance.

Direct Labor

The compensation, such as salaries or wages, given to workers who are directly engaged in producing goods or services.

Manufacturing Costs

Expenses directly related to the production of goods, including raw materials, labor, and overhead.

Prime Costs

The sum of direct materials cost and direct labor cost, representing the primary costs involved in producing a product.