1. A CPA would recommend changing from plantwide overhead rate application to departmental rates under which of the following circumstances?

a. The plant produces one product.

b. The plant produces multiple products that may or may not pass through all producing departments.

c. The plant produces multiple products that pass through all of the producing departments.

d. The plant produces many different products that consume the same amount of resources in each producing department.

2. Which of the following statements is true?

a. The direct method of service department cost allocation takes no account of service department reciprocity.

b. If there is service department reciprocity, the best method to use is a single charging rate.

c. A plantwide overhead rate is used to account for service department reciprocity.

d. The best method of service department cost allocation is the one that minimizes total overhead costs.