Which of the following condition(s)favors using departmental overhead rates in place of a plantwide overhead rate?
A)Different departments incur different amounts and types of manufacturing overhead.
B)Different jobs or products use the departments to a different extent.
C)Both of the above are true.
D)Neither of the above are true.

Question

Quizplus · Accepted Answer

When different departments incur different amounts and types of manufacturing overhead, departmental overhead rates are more appropriate as they ensure that the overhead costs are allocated to products more accurately. Similarly, when different jobs or products use the departments to a different extent, departmental overhead rates help allocate overhead costs more accurately. Thus, both conditions favor using departmental overhead rates.

Which of the Following Condition(s)favors Using Departmental Overhead Rates in Place