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Which of the following are advantages of using the plantwide overhead rate method?
A) The use of cost pools is considerably more accurate than other overhead allocations.
B) The necessary information is readily available.
C) It is more accurate than traditional overhead allocations.
D) Each department has its own overhead rate and its own allocation base.
E) It takes into account that when products differ in batch size and complexity,they usually consume different amounts of overhead resources.
Plantwide Overhead Rate Method
A cost accounting method that applies a single overhead rate to all units produced across different departments or processes in a facility.
Cost Pools
A grouping of individual costs from which cost allocations are made later, used to distribute expenses in cost accounting practices.
Overhead Allocations
The process of distributing indirect costs to various cost objects, such as products or departments, to accurately reflect expenses.
- Discern the approaches used in the allocation of overhead costs through varied overhead rate methods, namely plantwide, departmental, and activity-based.
- Acquire knowledge about the pros and cons of volume-based allocation methods in comparison to activity-based costing.
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Learning Objectives
- Discern the approaches used in the allocation of overhead costs through varied overhead rate methods, namely plantwide, departmental, and activity-based.
- Acquire knowledge about the pros and cons of volume-based allocation methods in comparison to activity-based costing.
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