If the amount of effort and attention to products varies substantially throughout a company's various manufacturing operations, the company might consider the use of:
A) a plantwide overhead rate.
B) departmental overhead rates.
C) actual overhead rates instead of predetermined overhead rates.
D) direct labor hours to determine the overhead rate.
E) machine hours to determine the overhead rate.

Question

Quizplus · Accepted Answer

When effort and attention to products vary significantly across different manufacturing operations within a company, using departmental overhead rates allows for more accurate allocation of overhead costs to products based on the specific activities and resources used in each department. This method recognizes the diversity in operations and provides a more precise costing method than a plantwide overhead rate, which averages costs across all operations.

If the Amount of Effort and Attention to Products Varies