The use of departmental overhead rates will generally result in the use of a
A) single cost allocation base.
B) separate cost allocation base for each department in the factory.
C) single overhead cost pool for the factory.
D) separate cost allocation base for each activity in the factory.

Question

Quizplus · Accepted Answer

Departmental overhead rates are based on the use of separate cost allocation bases for each department in the factory. This allows for a more accurate allocation of overhead costs to products or services based on the specific resources used by each department. Using a single cost allocation base or a single overhead cost pool would not provide enough detail or accuracy in allocating overhead costs. Separating cost allocation bases for each activity in the factory would be more detailed than necessary, and may result in unnecessary complexity and cost.

The Use of Departmental Overhead Rates Will Generally Result in the Use