Using multiple department factory overhead rates 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 than a plantwide rate
D) applies overhead costs to all departments equally

Question

Quizplus · Accepted Answer

Using multiple departmental overhead rates allows for a more accurate allocation of overhead costs to products, as it recognizes that different products may use different amounts of overhead resources from different departments. This results in more accurate product costs compared to using a single plantwide overhead rate that applies the same rate to all products regardless of their actual use of overhead resources.

Using Multiple Department Factory Overhead Rates Instead of a Single