Companies use three common approaches to assign overhead costs to products-plantwide overhead rate, departmental overhead rates, and activity-based costing.The most accurate of these three approaches is the plantwide overhead rate.

Question

Quizplus · Accepted Answer

The most accurate approach is actually activity-based costing, as it assigns overhead costs to products based on the actual activities that drive those costs. Plantwide and departmental overhead rates rely on assumptions and averages that may not accurately reflect the specific costs of each product.

Companies Use Three Common Approaches to Assign Overhead Costs to Products-Plantwide