Which of the following is a disadvantage of the departmental overhead rate method?
A) It may fail to accurately assign many overhead costs that are not driven by production volume.
B) Allows each department to have its own overhead rate.
C) Allows each department to have its own allocation base.
D) The departmental overhead rate is usually more accurate in overhead allocations than the plantwide overhead rate.

Question

Quizplus · Accepted Answer

The departmental overhead rate method may fail to accurately assign many overhead costs that are not driven by production volume. This is a disadvantage because it can result in inefficient cost allocation and inaccurate product costing.

Which of the Following Is a Disadvantage of the Departmental