Use of a plantwide factory overhead rate assumes that the activities causing overhead costs are the same across all departments and products.

Question

Quizplus · Accepted Answer

Plantwide factory overhead rate is calculated by dividing the total estimated overhead cost by the total estimated allocation base for the entire plant. This assumes that the same activities causing overhead costs are present in all departments and for all products, hence the overhead rate is applied uniformly to all products and departments.

Use of a Plantwide Factory Overhead Rate Assumes That the Activities