Using a single plant-wide overhead rate is likely to cause some distortion in allocation of product-level costs.

Question

Quizplus · Accepted Answer

Using a single plant-wide overhead rate assumes that all products consume overhead costs in the same proportion, which may not be true. This can result in product-level costs being over- or under-allocated, leading to distortion in the cost of goods sold and potentially inaccurate pricing decisions.

Using a Single Plant-Wide Overhead Rate Is Likely to Cause