Use of a plantwide factory overhead rate does not distort product costs when products require different ratios of allocation-base usage in each production department.

Question

Quizplus · Accepted Answer

Using a plantwide factory overhead rate can distort product costs when products require different ratios of allocation-base usage in each production department, because it applies the same overhead rate to all products regardless of their specific usage of departmental resources.

Use of a Plantwide Factory Overhead Rate Does Not Distort