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Chapter 3hw - Bus 215 Section 08 Homework Assignment...

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Bus 215 Section 08 September 28, 2010 Homework Assignment: Chapter 3 Q3-1) Actual manufacturing overhead costs are not traced to jobs because they are indirect. Such costs do not change from month to month, as opposed to the number and variety or products made in the factory may vary dramatically from one month to the next. Since the costs are indirect, they are clearly not caused by – and cannot be directly traced to – any particular product. Q3-6) Some production costs must be assigned to products through an allocation process because of the difficulties in assigning them to a specific product such as manufacturing overhead costs. The difficulties are as the following: 1) they are an indirect cost 2) M.O consists of a wide range of different items 3) the costs remain relatively constant from one period to the next. Q3-7) Many managers believe that such fluctuations in product costs serve no useful purpose if using actual manufacturing overhead costs instead of predetermined overhead rates. Example: the costs of heating and cooling a factory in Illinois will be highest in the winter and summer
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