Departmental overhead rates are generally preferred to plant-wide overhead rates when:
A)the activities of the various departments in the plant are not homogeneous.
B)the activities of the various departments in the plant are homogeneous.
C)most of the overhead costs are fixed.
D)all departments in the plant are heavily automated.

Question

Quizplus · Accepted Answer

When the activities of the various departments in the plant are not homogeneous, departmental overhead rates are generally preferred over plant-wide overhead rates. This is because departmental overhead rates allow for a more accurate allocation of overhead costs based on the specific activities and costs of each department. If the activities are homogeneous, plant-wide overhead rates may be more appropriate. The choice of overhead rate also depends on the nature of the overhead costs, as well as the level of automation in the plant.

Departmental Overhead Rates Are Generally Preferred to Plant-Wide Overhead Rates