Use of a plantwide factory overhead rate does not distort product costs when there are differences in the factory overhead rates across different production departments.

Question

Quizplus · Accepted Answer

Using a plantwide factory overhead rate can distort product costs when there are significant differences in the factory overhead rates across different production departments, as it applies the same overhead rate to all products regardless of the specific departmental overhead costs they incur.

Use of a Plantwide Factory Overhead Rate Does Not Distort