209. CSO: 1C3b LOS: 1C23c
Young Company is beginning operations, and is considering three alternative ways in
which to allocate manufacturing overhead to individual units produced. Young can use a
plantwide rate, departmental rates, or activity based costing. Young will produce many
types of products in its single plant, and not all products will be processed through all
departments. In which one of the following independent situations would reported net
income for the first year be the same regardless of which overhead allocation method had
been selected?
a. All production costs approach those costs that were budgeted.
b. The sales mix does not vary from the mix that was budgeted.
c. All manufacturing overhead is a fixed cost.
d. All ending inventory balances are zero.
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