The traditional approach to applying overhead costs to a product or service is to use a(n)
A)actual overhead rate.
B)activity-based overhead rate.
C)departmental overhead rate.
D)single-plantwide overhead rate.

Question

Quizplus · Accepted Answer

The traditional approach to applying overhead costs uses a single-plantwide overhead rate. This means that all overhead costs are lumped together and applied to a product or service using a predetermined rate based on direct labor hours, machine hours or another measure of activity. Although this method is simple to calculate, it may not accurately reflect the actual costs of the product or service.

The Traditional Approach to Applying Overhead Costs to a Product