Why May Departmental Overhead Rates NOT Correctly Assign Overhead Costs

question 61

Multiple Choice

Why may departmental overhead rates NOT correctly assign overhead costs?

• A) Because of the use of direct labour hours in allocating overhead costs to products rather than machine time or quantity of materials.
• B) Because of the high correlation between direct labour hours and the incurrence of overhead costs.
• C) Because of the over-reliance on volume as a basis for allocating overhead costs where products differ regarding the number of units produced, lot size, or complexity of production.
• D) Because of the difficulties associated with identifying cost pools for the first stage of the allocation process.

---

Definitions:

Longissimus Capitis

A muscle in the human body that extends from the upper vertebrae to the skull, aiding in head movement and extension of the vertebral column.

Interspinales

refer to small muscles situated between the spinous processes of the vertebral column, primarily involved in the extension and rotation of the spine.

Multifidus

A series of small muscles that run along the vertebral column, providing stability and supporting spinal movements.

Serratus Anterior

A muscle that originates on the surface of the upper eight or nine ribs and inserts along the entire anterior length of the medial border of the scapula, playing a key role in the movement of the shoulder blade.