Which of the Following Condition(s) Favours Using Departmental Overhead Rates

question 63

Multiple Choice

Which of the following condition(s) favours using departmental overhead rates in place of a plantwide overhead rate?

• A) Manufacturing overhead represents a small proportion of total cost.
• B) Different jobs or products use the departments to a different extent.
• C) Departments use a similar amount of indirect costs.
• D) Products spend the same amount of time in each department.

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Definitions:

Incremental Value

Incremental value refers to the additional or extra value generated by undertaking a specific action or investment compared to not doing so.

Merger Premium

The merger premium is the additional cost above the market price that a company pays to acquire another company, often reflecting the perceived future value of the target company.

Shares Outstanding

refers to the total number of shares of a corporation that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s insiders.

Market Price

The prevailing price at which a service or asset is being offered for sale or purchase.