Multiple Choice
Costs developed to identify what products should cost are called:
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4. Merchandising Operations
Cost of Goods Sold - Perpetual Inventory vs. Periodic Inventory
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Under the plantwide overhead rate method, what is the cost object to which overhead costs are assigned?
A
Entire production plant or facility
B
Individual job or batch
C
Individual unit of product
D
Specific department
Verified step by step guidance1
Understand the concept of the plantwide overhead rate method: This method uses a single overhead rate to allocate overhead costs across all products or jobs within the entire production facility.
Identify the cost object: A cost object is the entity or item to which costs are assigned. In the plantwide overhead rate method, the cost object can vary depending on the allocation approach.
Analyze the options provided: The options include 'Entire production plant or facility,' 'Individual job or batch,' 'Individual unit of product,' and 'Specific department.' Consider which of these aligns with the plantwide overhead rate method.
Recognize that the plantwide overhead rate method typically assigns overhead costs to the entire production plant or facility, as it uses a single rate for the entire operation rather than breaking it down by department or specific job.
Conclude that the correct cost object under the plantwide overhead rate method is the 'Entire production plant or facility,' as this method does not differentiate between individual jobs, units, or departments.
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