A plantwide predetermined overhead rate based on direct labor-hours results in low overhead costs for products with a high direct labor-hour content and high overhead costs for products with a low direct labor-hour content.

Question

Quizplus · Accepted Answer

A plantwide predetermined overhead rate based on direct labor-hours actually results in the opposite effect: products with a high direct labor-hour content will absorb more overhead costs, making their overhead allocation higher, not lower.

A Plantwide Predetermined Overhead Rate Based on Direct Labor-Hours Results