When a Manufacturer Changes from Using a Single Plantwide Predetermined

question 18

True/False

When a manufacturer changes from using a single plantwide predetermined overhead rate to multiple predetermined overhead allocation rates,the product unit cost may be more accurate.

---

Definitions:

Sunk Costs

Costs that have already been incurred and cannot be recovered or altered by future actions, and therefore should not influence current or future business decisions.

Out-of-pocket Cost

Expenses that are paid out directly and result in a financial outlay.

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted, indicating how much contributes to covering fixed costs and generating profit.

Operating Capacity

The maximum output that a company can produce under normal circumstances over a specific period.