If a Costing System Uses a Single Base to Allocate

question 18

Multiple Choice

If a costing system uses a single base to allocate overhead costs that are results of several production activities:

• A)Products that use relatively more of this base tend to be undercosted.
• B)Products that use relatively less of this base tend to be overcosted.
• C)Products that use relatively more of this base tend to be overcosted.
• D)Products may be over- or under-costed, depending on the activity level.
• E)Products may be over- or under-costed, depending on the overhead rate.

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Definitions:

Disbursements

Money paid out by a business or organization for various purposes, including operating expenses, investments, and dividends.

Fixed Cost

Costs that do not fluctuate with changes in production level or sales volume, such as rent or salaries.

Miller-Orr Model

A financial model used to manage cash flows and determine optimal cash reserves for a company.

Monthly Disburses

This refers to the process of distributing or paying out funds at regular monthly intervals.