In a job costing system it is necessary to divide the business up into departments. Fixed costs (or overheads) will be collected for each department. Where a particular fixed cost relates to the business as a whole it must be divided between the departments. Usually this is done on the basis of area of floorspace occupied by each department relative to the entire business. When the total fixed costs for each department have been identified, this will be divided by the number of hours that were worked in each department to deduce an overhead recovery rate. Each job which was worked on in a department will have a share of fixed costs allotted to it according to how long it was worked on. The total cost for each job will therefore be the sum of the variable costs of the job and its share of the fixed costs. It is essential that this approach is taken in order to deduce a selling price for the firm’s output.

You are required to prepare a table of two columns. In the first column you should show any phrases or sentences with which you do not agree (in the above statement) and in the second column you should show your reason for disagreeing with each one.