Question: Traditionally, overhead has been assigned based on direct labor hours or machine hours. What effect does this have on the cost of a high-volume item?

Traditionally, overhead has been assigned based on direct labor hours or machine hours. What effect does this have on the cost of a high-volume item?
a. over-costs the product

b. under-costs the product

c. has no effect the product cost

d. cost per unit is unaffected by product volume

Step by Step Solution

★★★★★

3.43 Rating (166 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

Answer a overcosts the product Overhead costs often referred to as overhead or operating expenses re... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

A company uses departmental overhead rates based on direct labor hours. Is the sum of departmental over- or under applied factory overhead any different if a plant wide or blanket rate is used? Are...

What is stretching accounts payable? What effect does this action have on the cost of giving up a cash discount?

What is a flow-through entity, and what effect does this designation have on how business entities and their owners are taxed?

Product Costs and Product Profitability Reports, using a Single Plantwide Factory Overhead Rate Isaac Engines Inc. produces three productspistons, valves, and camsfor the heavy equipment industry....

Product Costs and Product Profitability Reports, using a Single Plantwide Factory Overhead Rate Isaac Engines Inc. produces three products-pistons, valves, and cams-for the heavy equipment industry....

Product Costs and Product Profitability Reports, using a Single Plantwide Factory Overhead Rate Elliott Engines Inc. produces three productspistons, valves, and camsfor the heavy equipment industry....

Elliott Engines Inc. produces three productspistons, valves, and camsfor the heavy equipment industry. Elliott Engines has a very simple production process and product line and uses a single...

The following data are for the two products produced by Tadros Company. Direct materials Direct labor hours Machine hours Batches Volume Engineering modifications Number of customers Product A $13...

Product Costs and Product Profitability Reports, using a Single Plantwide Factory Overhead Rate Elliott Engines Inc. produces three products-pistons, valves, and cams-for the heavy equipment...

describes Thomas-Kilmann five conflict modes, indicating when it would be appropriate for a manager to use each mode and when its use would be ineffective.

1.Liverpool corporation which manufactures appliances for other companies made sales of $200000000 subject to the product warranties. In the past years between 4% and 6% of the products provided...

Exit strategy recommendations and plan: Outline your change management strategy for transition after the acquisition. Specifically, you must address the following criteria: Change management...

Modern workplaces have developed in response to the increasing diversity of the workforce. Building a learning organization that can meet the requirements of its employees and customers requires...

describe what you now know and understand about health care reimbursement. You are asked present this paper on a Panel with other HIM students, and your participation is to "describe to an audience...

With Polya's first two steps to solving problems in mind, describe how you understand the problem and create an algorithm for searching for a specific number out of N numbers. Think about the inputs...

Assuming the HOMEWORK 1 0 table has three columns ( Col 1 , Col 2 , Col 3 , in this order ) , which of the following commands stores a NULL value in COL 3 of the HOMEWORK 1 0 table? 1 . INSERT INTO...

A woman at a point A on the shore of a circular lake with radius 2 mi wants to arrive at the point C diametrically opposite on the other side of the lake in the shortest possible A time. She can walk...

Liquidity planning primarily is designed to assist management in dealing with relatively predictable events.

Both General Motors (GM) and Toyota have production facilities in Texas. GMs plant was built in 1956 on a 249-acre site and has since undergone billions of dollars in renovations. Toyotas plant was...

Explain the concept of equivalent units assuming the weighted average method is used.

The balance in Macedonia Companys finished goods inventory account was $650,000 at the beginning of January and $525,000 at the end of January. Cost of goods manufactured for the month totaled...

Vehicles heading west on Front Street may turn right, turn left, or go straight ahead at Elm Street. The city traffic engineer believes that half of the vehicles will continue straight through the...

The publisher of a sports magazine plans to offer new subscribers one of three gifts: a sweatshirt with the logo of their favorite team, a coffee cup with the logo of their favorite team, or a pair...

The Consumer Confidence Survey is a monthly review that measures consumer confidence in the U.S. economy. It is based on a typical sample of 5,000 U.S. households. Last month 9.1% of consumers said...