Asked by
Noora Sheikh
on Oct 15, 2024
Verified
Compared to the plantwide overhead rate method,the departmental overhead rate method usually results in more accurate overhead allocations.
Departmental Overhead Rate
A charge rate specific to each department of a company, calculated to allocate indirect costs to products more accurately.
Plantwide Overhead Rate
A single overhead rate calculated by dividing total factory overhead by total direct labor hours or machine hours, applied company-wide.
Overhead Allocations
The process of distributing indirect costs (overheads) across various cost objects, such as products or departments, based on predetermined criteria.
- Realize the importance of precise allocation of overhead expenses and the influence of distinct allocation methods on the preciseness of product costing.
Verified Answer
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Learning Objectives
- Realize the importance of precise allocation of overhead expenses and the influence of distinct allocation methods on the preciseness of product costing.