Hazel Company Allocates Overhead on the Basis of Direct Labor

question 82

Multiple Choice

Hazel Company allocates overhead on the basis of direct labor hours.It allocates overhead costs of $8,000 to two different jobs as follows: Job 1: (10 hours) = $4,000;Job 2: (10 hours) = $4,000
The production process for Job 2 was then automated.Now Job 2 requires only two hours of direct labor but four hours of mechanical processing.As a result,total overhead increases to $12,000.Select the incorrect statement from the following.

• A) While the actual processing of Job 1 was not affected by automation,it received an increase of $6,000 in its overhead allocation.
• B) The use of machine hours as the allocation base would significantly improve the overhead cost allocations.
• C) Automation and the costing system used by the company causes the cost of Job 1 to be significantly overstated.
• D) The increased overhead costs associated with automation should be allocated to both jobs.

Understand the effects of currency devaluation on consumer and supplier costs, and how it influences export and import prices.

Grasp the concept of purchasing power parity and its implications on currency value relative to inflation and price levels across countries.

Comprehend how technological advancements in a country can affect its currency's international value.

Understand the factors influencing currency demand and exchange rates.

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Definitions:

La Niña

A climate pattern characterized by cooler than average sea surface temperatures in the central and eastern tropical Pacific Ocean, influencing global weather patterns.

Moist Air

Air that contains a high level of water vapor, often leading to higher humidity levels and affecting weather patterns and human comfort.

Precipitation

Any water substance, whether solid or liquid, that comes down from the clouds and touches the Earth, encompassing rain, snow, sleet, and hail.

Greenhouse Effect

The warming of Earth's surface and lower atmosphere caused by the presence of certain gases in the air which trap energy from the sun.