In a traditional simple costing system, a plant-wide cost pool accumulates factory-wide Manufacturing Overhead (MOH). What is the correct formula to calculate the plant-wide rate?
A) Total MOH costs in a plant-wide cost pool × Total quantity of a single driver
B) Total MOH costs in a plant-wide cost pool/Total quantity of a single driver
C) Total quantity of a single driver + Total MOH costs in a plant-wide cost pool
D) Total quantity of a single driver/Total MOH costs in a plant-wide cost pool

Question

Quizplus · Accepted Answer

Choice B represents the correct formula used to calculate the plant-wide rate, and that makes it the correct answer. Choices A, C, and D all contain the correct components but either have them in the wrong place or have multiplied or added items when there should have been division.

In a Traditional Simple Costing System, a Plant-Wide Cost Pool