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The new manager of the insurance division does not understand how the company can have so many ...

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The new manager of the insurance division does not understand how the company can have so many ...

The new manager of the insurance division does not understand how the company can have so many overhead rates for assigning costs to the activities of the company's life insurance underwriters. There is one rate schedule for average assignable costs when agents write standard policies. There is another rate schedule which the agents must complete when they write special policies, and these policies are costed out differently from those that are categorized as standard policies.

Required:
a. Why might the company have different costing systems with different overhead rates for the standard and specialized policies?
b. Which rate (standard or specialized) would cross-subsidize the other if the company used only one set of overhead rates for costing its policies?

Textbook

Cost Accounting: A Managerial Emphasis, Canadian Edition

Edition: 7^th

Authors: Horngren, Datar, Rajan, Beaubien

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ruskin Author

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6 years ago

This helped my grade so much Perfect

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I appreciate what you did here, answered it right Smiling Face with Open Mouth

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this is exactly what I needed

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