Which of the Following Statements Is(are)false Regarding the Direct Method

question 24

Multiple Choice

Which of the following statements is(are) false regarding the direct method of allocating service department costs? (A) The selection of an allocation base in the direct method is easier than the selection of an allocation base in the step method.(B) Once an allocation is made from a service department using the direct method,no further allocations are made back to that department.

• A) Only A is false.
• B) Only B is false.
• C) Neither A nor B is false.
• D) Both A and B are false.

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Definitions:

Predetermined Overhead Rate

An estimated overhead rate used to assign manufacturing overhead costs to products or job orders, based on a planned activity level.

Capacity

The maximum level of output that a company can sustain to produce goods or provide services in a given period.

Automated Jointer

A computer-controlled machine tool used in woodworking to flatten or straighten edges of wood boards, enhancing efficiency and precision.

Predetermined Overhead Rate

An estimated rate used to allocate manufacturing overhead costs to individual units of production based on a chosen allocation base such as labor hours or machine hours.