Asked by Claire Fening on Jun 18, 2024
Verified
A company will improve job cost accuracy by using multiple overhead rates even if it cannot identify more than one overhead cost driver.
Job Cost Accuracy
The precision with which a company estimates and tracks the costs associated with specific jobs or projects.
Overhead Cost Driver
A factor that causes the cost of overheads to change, such as machine hours or labor hours.
- Understand the impact of using multiple overhead rates and choosing appropriate cost drivers on costing accuracy.
Verified Answer
MA
Mariam AbdalaJun 19, 2024
Final Answer :
False
Explanation :
Using multiple overhead rates is beneficial for improving job cost accuracy only if a company can identify different overhead cost drivers that correlate with the costs incurred. Without identifying more than one overhead cost driver, applying multiple rates would not be based on meaningful distinctions and thus would not necessarily improve accuracy.
Learning Objectives
- Understand the impact of using multiple overhead rates and choosing appropriate cost drivers on costing accuracy.
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