Asked by Viktoriia Gervasi on May 08, 2024
Verified
Which of the following costing systems is more accurate for overhead cost allocation and most likely to allow managers the ability to make better pricing decisions?
A) Departmental overhead allocation rates.
B) Plantwide overhead rate.
C) Activity-based costing.
D) Traditional costing system.
E) Direct costing.
Activity-Based Costing
An accounting method that assigns costs to products or services based on the activities they require, improving accuracy in assigning costs.
Overhead Cost Allocation
The process of spreading out indirect costs (overheads) to different departments or products within a company, aimed at determining true costs of products or services.
- Analyze how overhead allocation methods affect product pricing and business decisions.
Verified Answer
Learning Objectives
- Analyze how overhead allocation methods affect product pricing and business decisions.
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