Multiple Choice
Cost-volume-profit (CVP) analysis helps managers predict how changes in which of the following factors will affect a company's net income?
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4. Merchandising Operations
Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory
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In the plantwide overhead rate method, what is considered the cost object?
A
Each specific product line
B
Individual departments within the company
C
The entire production plant or company as a whole
D
Individual jobs or batches
Verified step by step guidance1
Understand the concept of the plantwide overhead rate method: This method allocates overhead costs to products using a single overhead rate for the entire production plant or company.
Identify the cost object in the plantwide overhead rate method: The cost object is the entity or item for which costs are being measured or allocated.
Clarify the scope of the plantwide overhead rate method: Since this method uses a single rate for the entire plant, the cost object is the entire production plant or company as a whole.
Compare the plantwide overhead rate method to other methods: Unlike departmental or activity-based costing methods, which allocate costs to specific departments or activities, the plantwide method focuses on the company as a single unit.
Conclude that the correct cost object in the plantwide overhead rate method is the entire production plant or company as a whole, as it does not differentiate between individual products, departments, or jobs.
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