CMA Intermediate · Cost Accounting · Overheads
Which one of the following overhead items is controllable by the head of a production department in the short run?
Indirect supplies consumed within the department are controllable by its head, since the head decides how much is used. Apportioned head office expenses, shared building depreciation and insurance premium are fixed by higher management, so they are uncontrollable at department level.
- AApportioned share of the head office expenses
- BDepreciation on building shared by all departments
- CIndirect supplies consumed within the departmentCorrect
- DFactory insurance premium apportioned to the department
Explanation
A department head can influence consumption of indirect supplies in the department. Apportioned head office costs, shared building depreciation and insurance premium are allocated by management decisions outside the head's control.
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