If a company's plantwide overhead rate is allocated based on direct labor hours, then each job will be allocated manufacturing overhead based on the total direct labor hours incurred on the job, regardless of the manufacturing department in which those hours were incurred.

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Quizplus · Accepted Answer

Plantwide overhead rate based on direct labor hours means that the total overhead costs are divided by the total direct labor hours for the entire plant. This rate is then used to allocate manufacturing overhead to each job based on its direct labor hours. Therefore, each job will be allocated overhead based on the total direct labor hours incurred on the job, regardless of the manufacturing department.

If a Company's Plantwide Overhead Rate Is Allocated Based on Direct