With a Fixed Charge Method, Indirect IT Department Costs Are

question 26

Multiple Choice

With a fixed charge method, indirect IT department costs are ____.

• A)treated as general organizational costs and not charged to other departments
• B)allocated to other departments based on user-oriented activity
• C)varied from month to month, depending on a department's use of resources
• D)divided among all departments in the form of a set monthly charge

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Definitions:

Predetermined Manufacturing Overhead Rate

An estimated rate used to assign manufacturing overhead costs to products or job orders, calculated before the periods begins based on expected annual overhead costs and activity levels.

Manufacturing Overhead

All indirect manufacturing costs, including costs related to running the production facility but not directly linked to individual products.

Machine-Hours

A measure of the amount of time machines are used in the production process, often utilized as an allocation base for applying overhead costs to products.

Unit Product Costs

The total cost associated with producing one unit of a product, including direct materials, direct labor, and overhead.