Question: In the recent past companies commonly used either a plantwide

In the recent past, companies commonly used either a plantwide rate or a limited number of departmental rates to allocate overhead to products and services. The following statements describe some of the advantages and disadvantages of using plantwide and departmental rates. Read and consider each of the following statements:
a. Departmental overhead rates are much simpler to apply than plantwide overhead rates.
b. Plantwide overhead rates allow companies with diverse product offerings to accurately assign overhead costs.
c. Companies frequently believe the use of plantwide overhead rates encourages efficient production operations.
d. The use of a plantwide overhead rate is less time consuming and less expensive than multiple departmental overhead rates.
e. A plantwide overhead rate can lead to a more accurate identification of a company’s cost driver.
f. As direct labor and direct materials have become a greater proportion of product costs, the assignment of overhead costs has become less critical.
g. The selection of a cost driver is much more important when a company uses multiple departmental overhead rates than when it uses a plantwide overhead rate.

Indicate whether each of the statements in exercise 34 is true or false.

View Solution:

Sale on SolutionInn
  • CreatedMarch 11, 2015
  • Files Included
Post your question