If the amount of effort and attention to products varies substantially throughout a company's various manufacturing operations, the company might consider the use of:
A)a plantwide overhead rate.
B)departmental overhead rates.
C)actual overhead rates instead of predetermined overhead rates.
D)direct labour hours to determine the overhead rate.
E)machine hours to determine the overhead rate.

Question

Quizplus · Accepted Answer

Departmental overhead rates would allow the company to assign overhead costs based on the specific level of effort and attention required in each department. This would result in a more accurate and fair allocation of overhead costs than a plantwide overhead rate, which would assume that all departments require the same level of attention and effort. Using actual overhead rates instead of predetermined overhead rates may be more accurate, but it can also be more time-consuming and complicated to calculate. Using direct labor or machine hours to determine the overhead rate may not reflect the varying levels of effort and attention required in different departments.

If the Amount of Effort and Attention to Products Varies