Which of the Following Are Examples of Cost Reductions That

question 27

Multiple Choice

Which of the following are examples of cost reductions that can result from an acquisition?
I.allocating fixed overhead across a wider range of products
II.lowering office payroll costs by combining job functions
III.benefiting from economies of scale when purchasing raw materials
IV.reducing the number of management personnel required

• A)I and III only
• B)II and IV only
• C)I, II, and IV only
• D)II, III, and IV only
• E)I, II, III, and IV

---

Definitions:

Overapplied Manufacturing Overhead

Occurs when the amount of overhead applied to products or jobs during a period is greater than the actual overhead costs incurred.

Finished Goods Inventory

The value of a company’s inventory of products that are completed and ready for sale.

Underapplied

In accounting, underapplied refers to when the allocated overhead costs are less than the actual overhead costs incurred.

Direct Materials Cost

The expense associated with the raw materials directly used in the production of goods.