Which of the following accurately describes advantages and disadvantages of employing a system of allocation that uses a plant-wide rate?
A)The plant-wide rate approach is the simplest to apply, but it is also the most costly to implement.
B)The plant-wide rate approach is the simplest to apply, but most likely provides the least accurate product costs.
C)The plant-wide rate may be straightforward, but it is not appropriate for small businesses that offer a single service or product.
D)The plant-wide rate really offers no advantage whatsoever.

Question

Quizplus · Accepted Answer

The plant-wide rate approach is simple to apply because it involves allocating overhead costs based on a single predetermined rate, but the simplicity comes at the expense of accuracy. The plant-wide rate is unable to account for variations in product costs that may result from differences in production processes or materials used. This could cause some products to be overcosted while others are undercosted, leading to incorrect pricing decisions and profit calculations.

Which of the Following Accurately Describes Advantages and Disadvantages of Employing