When multiple production department rates are used to apply overhead to products, a. only fixed overhead costs are first directly traced to support and production departments and then support department costs are allocated to production departments b. support department costs are allocated to production departments and then all overhead costs are directly traced to support and production departments c. all overhead costs are first directly traced to support and production departments and then support department costs are allocated to production departments d. all manufacturing costs are first directly traced to support and production departments and then support department costs are allocated to production departments

Question

Social Studies

Francesca Anderson

18 May, 09:32

When multiple production department rates are used to apply overhead to products, a. only fixed overhead costs are first directly traced to support and production departments and then support department costs are allocated to production departments b. support department costs are allocated to production departments and then all overhead costs are directly traced to support and production departments c. all overhead costs are first directly traced to support and production departments and then support department costs are allocated to production departments d. all manufacturing costs are first directly traced to support and production departments and then support department costs are allocated to production departments

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Answers (1)

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Kai Garner · Answer 1

c. all overhead costs are first directly traced to support and production departments and then support department costs are allocated to production departments

Explanation:

This means that multiple production rates are as a result of trying to include every cost that are directly and indirectly linked with production outputs (in this case the overhead costs). In this arrangement, production overhead costs or overhead costs that can be directly linked with production outputs are accounted for first before costs overhead costs from support departments that can be linked with products albeit indirectly are accounted for in deriving full overhead cost of products