The use of separate variable and fixed overhead rates is better than a combined rate because such a system
A)is less expensive to operate and maintain.
B)does not result in underapplied or overapplied overhead.
C)is more effective in assigning overhead costs to products.
D)is easier to develop.

Question

Quizplus · Accepted Answer

The use of separate variable and fixed overhead rates is more effective in assigning overhead costs to products because it recognizes that these costs are incurred differently and at different rates depending on the volume of production. This method provides more accurate cost allocation and helps to avoid distortions caused by fluctuations in production volume. It may be more complex to develop and maintain than a combined rate system, but it ultimately leads to more accurate costing and decision making.

The Use of Separate Variable and Fixed Overhead Rates Is