Which of the Following Statements Is True with Regard to the Departmental

question 48

Multiple Choice

Which of the following statements is true with regard to the departmental overhead rate method?

• A) It is logical to use this method when overhead resources are consumed by various products in substantially the same way throughout multiple departments.
• B) It is logical to use this method when overhead resources are consumed by various products in substantially different ways throughout multiple departments.
• C) Each department has the same rate for the same activity pool.
• D) It requires one overhead cost pool and one rate.
• E) It is synonymous with activity-based costing.

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Definitions:

Sales Estimates

Projections or predictions about the future sales revenue of a business within a certain period, based on historical data, market analysis, and other factors.

Bottom-Up Process

The bottom-up process is an approach to planning or decision-making that starts at the operational or tactical level and proceeds upwards, allowing decisions to be made based on detailed data and observations.

Desired Inventory

Desired inventory refers to the optimal amount of stock a business aims to maintain to meet expected demand without incurring excessive carrying costs or stockouts.

Budgeted Purchases

The projected amount of goods or services a business plans to buy over a certain period, usually as part of its budgeting process.