Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

1. Introduction to Accounting

Types of Accounting

Financial Accounting

1. Introduction to Accounting

Types of Accounting

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Multiple Choice

Which type of accounting system uses a different overhead rate for each production department?

Activity-based costing method

Departmental overhead rate method

Plantwide overhead rate method

Job order costing method

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Verified step by step guidance

Understand the concept of overhead rates: Overhead rates are used to allocate indirect costs to products or services. Different methods exist to calculate these rates, depending on the level of detail and accuracy required.

Learn about the Departmental Overhead Rate Method: This method assigns a unique overhead rate to each production department. It recognizes that different departments may incur varying levels of overhead costs based on their activities and resources used.

Compare with other methods: The Plantwide Overhead Rate Method uses a single overhead rate for the entire plant, which may not accurately reflect the cost differences between departments. Activity-Based Costing allocates costs based on activities rather than departments, and Job Order Costing focuses on individual jobs rather than departmental overhead rates.

Identify the advantages of the Departmental Overhead Rate Method: This method provides more accurate cost allocation by considering the specific overhead costs of each department, making it suitable for companies with diverse production processes.

Apply the concept: To use the Departmental Overhead Rate Method, calculate the overhead rate for each department by dividing the total overhead costs of the department by its allocation base (e.g., machine hours or labor hours). Then, apply these rates to allocate overhead costs to products or services based on their usage of departmental resources.