Question

Departmental overhead rates are preferred over plantwide rates when: Multiple Choice The plant makes a single product. The products use different amounts of different processes in different departments. There are a number of different products in the plant which go through the same processes. The plant has a complex production process for a small number of products that go through the same production processes.

Answer 1

The products use different amounts of different processes in different departments

Step-by-step explanation:

Plant Wide overhead rates is basically a single rate that is used to assign to the company's manufacturing overhead costs. This is best used when a company produces single product. On the other hand, if the manufacturing of different products with use of different processes is being done then using plant wide rate (which applies only a single rate) might not be appropriate.

The activities of the diversified products would have a high correlation with regard to the input of overheads. Therefore, the departmental overhead rates are preferred when the products use different amounts of different processes in different departments.