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 On Account

Transactions where goods or services are sold to a customer with an agreement that payment will be made at a later date.

Cost Of Goods Sold

The total cost directly associated with the production of the goods sold by a company.

Times Interest Earned

A ratio that measures a company's ability to meet its interest obligations, calculated by dividing earnings before interest and taxes (EBIT) by the interest expense.

Financial Statements

Formal records of the financial activities and position of a business, person, or other entity.