Which of the following companies would be best served by a plantwide overhead rate?
A)A company that manufactures many different products and whose operations are an equal mix of labor and mechanized work.
B)A company that manufactures few products and whose operations are labor intensive.
C)A company that manufactures many different products and whose operations are highly mechanized.
D)A company whose products use overhead resources in very different ways.
E)A company whose products differ in batch size and complexity and consume different amounts of overhead resources.

Question

Quizplus · Accepted Answer

A company that manufactures few products and whose operations are labor intensive would be best served by a plantwide overhead rate because the simplicity of its operations and the uniformity in its product line make it less necessary to allocate overhead costs with the precision that departmental rates or activity-based costing would provide.

Which of the Following Companies Would Be Best Served by a Plantwide