Using multiple department factory overhead instead of a single plantwide factory overhead rate:
A) results in more accurate product costs
B) results in distorted product costs
C) is simpler and less expensive to compute than a plantwide rate
D) applies overhead costs to all departments equally

Question

Quizplus · Accepted Answer

Using multiple department factory overhead rates allows for more accurate allocation of overhead costs to products because it takes into account the different cost drivers and consumption rates of each department. This results in more precise product costs as opposed to a single plantwide factory overhead rate which may unfairly allocate costs to products that do not use the same amount of resources in each department.

Using Multiple Department Factory Overhead Instead of a Single Plantwide