Companies use three common approaches to assign overhead costs to products-plantwide overhead rate, departmental overhead rates, and activity-based costing. The most accurate of these three approaches is departmental overhead rates.

Question

Quizplus · Accepted Answer

Activity-based costing is generally considered the most accurate method as it assigns overhead costs based on actual activities that drive costs, rather than using broad averages.

Companies Use Three Common Approaches to Assign Overhead Costs to Products-Plantwide