Assume a Firm Uses Job Costing

question 25

Multiple Choice

Assume a firm uses job costing. Which of the following is NOT a good reason to use departmental overhead rates rather than a single plantwide rate?

• A) Total overhead costs amount to about 5 per cent of total prime costs.
• B) The various products made by the firm follow different sequences of manufacturing activities.
• C) Overhead costs in some departments are a very large proportion of total department cost, but are a very small proportion in other departments.
• D) The firm makes multiple products using common equipment and employees.

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Definitions:

Rebate

A partial refund to someone who has paid too much money for tax, rent, or a utility, or an incentive payment to induce a particular purchase or behavior.

Cash Balance

The amount of cash in a company's accounts at any given time, important for ensuring liquidity and operational compatibility.

Inventory Loan

A loan that is secured by the inventory of a business, allowing the company to use its inventory as collateral.