Question

Which of the following statements is true with regard to the departmental overhead rate method? Multiple Choice Each department has the same rate for the same activity pool. It is the same as activity-based costing. It is logical to use this method when overhead resources are consumed by various products in substantially the same way throughout multiple departments. It is logical to use this method when overhead resources are consumed by various products in substantially different ways throughout multiple departments. It requires one overhead cost pool and one rate.

Answer 1

It is logical to use this method when overhead resources are consumed by various products in substantially different ways throughout multiple departments.

Step-by-step explanation:

A departmental overhead rate is considered to be a standard charge based on the units of activity produced by a business segment. Overhead rate at the department level are usually applied in a more refined cost allocation environment, where there is a need to apply overhead cost as precisely as possible.