Use of activity-based costing will result in the development of:

a. one overhead rate based on direct labor hours.

b. no overhead rates; overhead rates are not used in activity-based costing.

c. one plantwide activity-based overhead rate.

d. multiple activity-based overhead rates.

Question

Business

Damari Mcfarland

19 June, 01:35

Use of activity-based costing will result in the development of:

a. one overhead rate based on direct labor hours.

b. no overhead rates; overhead rates are not used in activity-based costing.

c. one plantwide activity-based overhead rate.

d. multiple activity-based overhead rates.

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Answers (1)

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Aspen · Answer 1

Option D Multiple activity-based overhead rates.

Explanation:

The reason is that the every cost pool has its own overhead rate and this results in separate overhead rate for each cost pool. This is the reason why the activity based costing is critized for complex and time consuming method however nowadays this issue is resolved because of management accounting softwares.

So option A, B and C are incorrect because they say that activity based costing gives only one overhead rate which is not true and is the characteristic of absorption costing.

Use of activity-based costing will result in the development of:a. one overhead rate based on direct labor hours.b. no overhead rates; overhead rates are not used in activity-based costing.c. one plantwide activity-based overhead rate.d. multiple activity-based overhead rates.

Use of activity-based costing will result in the development of:

a. one overhead rate based on direct labor hours.

b. no overhead rates; overhead rates are not used in activity-based costing.

c. one plantwide activity-based overhead rate.

d. multiple activity-based overhead rates.