In a factory with several processing departments, a single factory overhead rate may not provide accurate product costs and effective cost control.

Question

Quizplus · Accepted Answer

This is because each department may have different levels of overhead costs, and using a single rate may result in over or under allocation of overhead costs to products. It is therefore necessary to use departmental overhead rates to ensure accurate product costing and effective cost control.

In a Factory with Several Processing Departments, a Single Factory