Which of the following is a disadvantage of the departmental overhead rate method?
A)The departmental overhead rate method assigns overhead on the basis of volume-related measures.
B)The departmental overhead rate method is more refined than the plantwide overhead rate method.
C)The departmental overhead rate method does not assign overhead on the basis of volume-related measures.
D)The departmental overhead rate method is simpler and less costly to implement than the plantwide rate method.
E)There are no disadvantages of the departmental overhead rate method.

Question

Quizplus · Accepted Answer

The departmental overhead rate method assigns overhead based on volume-related measures, which may not accurately reflect the actual overhead costs incurred by different products or services, especially if they consume resources at different rates. This can lead to less accurate product costing compared to methods that use more specific activity-based costing measures.

Which of the Following Is a Disadvantage of the Departmental