Generally accepted accounting principles require companies to use only one factory overhead rate for product costing.

Generally Accepted Accounting Principles

A set of rules and standards used by accountants to prepare, present, and report financial statements for companies and organizations.

Factory Overhead Rate

The method of allocating indirect costs to produced goods, usually calculated by dividing total factory overhead costs by a base such as direct labor hours or machine hours.

Product Costing

The method used to determine the expenses associated with producing a product, considering factors like raw materials, labor, and overhead costs.