Companies that use departmental overhead rates trace direct materials and direct labour to cost objects just as in a traditional costing systems.

Question

Quizplus · Accepted Answer

Companies that use departmental overhead rates typically trace direct materials and direct labour to cost objects just as in traditional costing systems. However, instead of using a single plant-wide overhead rate, departmental overhead rates are used to allocate overhead costs to the cost objects based on the activities that cause the overhead costs to be incurred.

Companies That Use Departmental Overhead Rates Trace Direct Materials and Direct