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Cogito Company makes large volumes of dietary supplements pills that are said to aid cognitive function and energy. Production is divided into several departments: preparation,

Cogito Company makes large volumes of dietary supplements pills that are said to aid cognitive function and energy. Production is divided into several departments: preparation, mixing and packaging. During their budgeting process they determine how much labor and materials should go into each batch of production, and hold their production managers responsible for any deviations from the budget. When the mixing department consumes labor and materials, the credits to wages payable and raw materials are balanced by a debit to work-in-process inventory. A large portion of overhead is driven by the activities required to add a new product to the product line, and to calibrate lines before production runs. All overhead is allocated on the basis of direct material dollars used in production, multiplied by a predetermined overhead rate drawn from the budget. Indicate whether the (partial) descriptions of the accounting system are true.The system is a two-stage overhead allocation systemGroup of answer choicesTrueFalse

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