Discuss the criticisms of traditional cost accounting methods
What will be an ideal response?
There can be an inappropriate allocation of overhead costs. The factors contributing to this problem are: A volume-driven form used for activity-driven overhead costs assigned to products. Overhead cost is either over- or understated due to allocation method used. The system may distort costs across products, especially if manufacturing is highly automated and performance measures do not accurately reflect the effects of factory automation: Measures collected are not integrated with performance measures. Lack of information about standard costs, variance, and functioning of production process. Lack of information about defect rates, breakdown frequency, percentage for finished goods completed without rework, etc.
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Any actions a firm takes that have the effect of reducing the level of rivalry in an industry that also do not require firms in an industry to directly communicate or negotiate with each other can be thought of as
A) tacit cooperation. B) tacit collusion. C) explicit collusion. D) competitive parity.
Conoco Company has an actual factory overhead cost of Depreciation Expense—Equipment of $5,000. Job-order costing is used. The journal entry to record this actual cost would include ________
A) Debit to Factory Department Overhead Control $5,000 and Credit to Accumulated Depreciation—Equipment $5,000 B) Debit to Depreciation Expense—Equipment $5,000 and Credit to Accumulated Depreciation—Equipment $5,000 C) Debit Work-In-Process Inventory $5,000 and Credit to Factory Department Overhead Control $5,000 D) Debit to Work-In-Process Inventory $5,000 and Credit to Factory Department Overhead Applied $5,000