Overhead Allocation Based Solely on a Measure of Volume Such

question 77

Multiple Choice

Overhead allocation based solely on a measure of volume such as direct labor-hours:

• A) is a key aspect of the activity-based costing model.
• B) will systematically overcost high-volume products and undercost low-volume products.
• C) will systematically overcost low-volume products and undercost high-volume products.
• D) must be used for external financial reporting.

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Definitions:

Interquartile Range

The measure of variability which is the difference between the third quartile and the first quartile in a dataset, indicating the spread of the middle 50%.

Percentiles

Values or scores below which a given percentage of observations in a group of observations fall.

Decile

A statistical measure dividing a dataset into ten equal parts, each containing 10% of the data points.

Median

The middle value in a set of data, where half the numbers are above it and half are below, when the data is arranged in ascending order.