Multiple (departmental) manufacturing overhead rates are considered preferable to a single (plantwide) overhead rate when: (CMA adapted)
A) Manufacturing is limited to a single product flowing through identical departments in a fixed sequence.
B) Various products are manufactured that do not pass through the same departments or use the same manufacturing techniques.
C) Individual cost drivers cannot accurately be determined with respect to cause-and-effect relationships.
D) The single or plantwide rate is related to several identified cost drivers.

Question

Quizplus · Accepted Answer

Multiple departmental rates are preferable when various products are manufactured that do not pass through the same departments or use the same manufacturing techniques, as it allows for more accurate allocation of overhead costs based on the specific activities and resources used by each product.

Multiple (Departmental) Manufacturing Overhead Rates Are Considered Preferable to a Single