Question

Albright Company produces a variety of products, some in labor-intensive departments and some in heavily automated departments. Using a company-wide overhead allocation rate based on direct labor will result in overcosting some products and undercosting others

a. trueb. false

Answer 1

The given statement is TRUE

Step-by-step explanation:

The global overhead rate is a standard overhead rate used by a company to transfer all of its overhead cost for production to goods or objects of cost. It is most widely used with simple cost models in smaller businesses.

In fact, the typical company prevents the use of a single overhead rate throughout the whole plane, instead using a small number of separately allocated cost pools with different overhead rates. In this way, the overall assignment is improved, but the time necessary to close the books is increased. There is a balance between a larger transparency effort to track and distribute multiple expense pools and the improved consistency of this additional effort in the financial statement.