If a manager in a high volume product plant is seeking more accurate product cost information, which of the following approaches are they likely to choose to allocate overheads to products?
A) Plantwide rate
B) Activity-based costing
C) Departmental overhead rates
D) Budgeted activity rate

Question

Quizplus · Accepted Answer

Activity-based costing is the best approach for allocating overheads to products in a high volume product plant as it focuses on identifying the specific activities that drive costs and assigns these costs to individual products based on their usage of these activities. This provides more accurate cost information as compared to plantwide rate, departmental overhead rates, or budgeted activity rate which may not account for the diverse range of activities and their associated costs.

If a Manager in a High Volume Product Plant Is