Question
(i) Describe why the reciprocal method of allocating support department costs is conceptually superior to the direct and step-down methods. (ii) What characteristics of the
(i)Describe why the reciprocal method of allocating support department costs is conceptually superior to the direct and step-down methods.
(ii)What characteristics of the production process would lead a company to use processcosting rather than job costing?
(iii)For the quarter just ended, BoSan Pty Ltd reported the following variances in one of its manufacturing departments:
Direct material price varianceUnfavourable
Direct material quantity varianceFavourable
Direct labour efficiency varianceFavourable
Direct labour rate varianceNegligible
The sum of the favourable variances above exceeded the unfavourable direct material price variance by a considerable amount. The quality of the output from the department was the same as usual. Practically all of the raw material used in this quarter was purchased in this quarter. Is there any connection between these variances? If so, explain.
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