Question

Requirement 1: (a). Which of the following statements are true concerning the predetermined overhead rate when the direct labor-hour requirement for the Deluxe model dropped from 5 hours to 2 hours? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) U The predetermined overhead rate decreases because the total estimated overhead cost increased. The predetermined overhead rate increased because the total direct labor-hours dropped. U The predetermined overhead rate increased because the total estimated overhead cost increased. The predetermined overhead rate decreased because the total direct labor-hours dropped. (b). Which of the following statements are true concerning the unit product costs for the Tourist model when the direct labor-hour requirement for the Deluxe model drops from 5 hours to 2 hours? (You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect.) O The ABC unit product cost of the Tourist model increases when the Deluxe model's direct labor-hour requirement decreases, but by not by as much as the traditional unit product cost. U The traditional unit product cost of the Tourist model increases when the Deluxe model's direct labor-hour requirement decreases. U Economically, the fact that the Deluxe model's direct labor-hour requirement changed should have little or no impact on the cost of the Tourist model.

Answer 1

Solution 1:

The true statement concerning the pre determined overhead rate when direct labor hour requirement for the Deluxe model dropped from 5 hours to 2 hours is "The predetermined overhead rate increased because the total direct labor hours dropped"

Hence 2nd option is correct.

Solution 2:

The true statement is "The traditional unit product cost for the tourist model increases when deluxe model direct labor hour's requirement decreases"

Hence 2nd option is correct.