Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. a client that has been allocating overhead just ba

A client that has been allocating Overhead just based on Square Footage in the Plant and...

80.2K

Verified Solution

Question

Accounting

A client that has been allocating Overhead just based on SquareFootage in the Plant and office. For example, if the purchasingdepartment uses 100 square feet to a total of 1000 sq feet, theywill get 10% of overhead allocated to the purchasing department. Arecently added employee discussed ABC accounting for overheadallocation. My question is, what might be one advantage over all ofthe new work required? The costs do not change.

Answer & Explanation Solved by verified expert
3.8 Ratings (399 Votes)
The biggest disadvantage of allocating overhead on the basis of traditional costing is that the allocation may be on some arbitrary basis without direct causeandeffect relationship between the cost and the cost centerThis leads to distortion of cost informationie    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

A client that has been allocating Overhead just based on SquareFootage in the Plant and office. For example, if the purchasingdepartment uses 100 square feet to a total of 1000 sq feet, theywill get 10% of overhead allocated to the purchasing department. Arecently added employee discussed ABC accounting for overheadallocation. My question is, what might be one advantage over all ofthe new work required? The costs do not change.

Other questions asked by students

Accounting
1.2K views

Supply costs at Coulthard Corporation's chain of gyms are listed below: Client-Visits Supply Cost March 11,666...

Geometry
1.2K views

28 29 30 Write a definition for a linear pair of angles Write a definition...

Basic Math
1.2K views

10 10 pts 399 Details For what value of x is the following true log...

Basic Math
1.2K views

Dashboard Harmony X ssons assessmentplayer e Manage School Atten General Mat

Accounting
1.2K views

Currington Company wants to use absorption cost-plus pricing to set the selling price on a...

Accounting
1.2K views

An earned value analysis (EVA) is performed after Month 10 on a 15-month commercial building...

Accounting
1.2K views

Wheadon, Davis, and Singer formed a partnership with Wheadon contributing $60,000, Davis contributing $50,000 and...

Accounting
1.2K views

Question 1 (20 marks) Assume that you are a loan officer of a bank. A...

Accounting
1.2K views

Demur Inc., a manufacturing company, has provided the following data for the month of April....

Accounting
1.2K views

Analyzing and Reporting Financial Statement Effects of Bond Transactions On January 1 of the...

Accounting
1.2K views

Sheridan Corporation operates in an industry that has a high rate of bad debts. Before...

Accounting
1.2K views

The degree of operating leverage multiplied by a percentage increase in sales revenue gives you...