When a company has established separate manufacturing overhead rates for each department, it is using
A)departmental overhead rates.
B)cost distortion.
C)a plantwide overhead rate.
D)none of the above.

Question

Quizplus · Accepted Answer

When a company establishes separate manufacturing overhead rates for each department, it is using departmental overhead rates. This allows for a more accurate allocation of overhead costs to each department based on their specific use and consumption of resources. The use of a plantwide overhead rate, on the other hand, would result in cost distortion as it assumes all departments have the same overhead costs and usage.

When a Company Has Established Separate Manufacturing Overhead Rates for Each