chapter 2 questions extra

Question 1

What factors should be considered in selecting an allocation base to be used in computing a predetermined overhead rate?

Answer 1

It should be the cost that DRIVES the expenses 🡪 the cause & effect

Question 2

Provide two BUSINESS reasons why overhead might be over or under applied in a given

Answer 2

Higher volume – more hours because we made more
New employees, employees in not in the right role, materials costs are more