Asked by Kevin Clayton on Jul 03, 2024
Verified
The plantwide overhead rate is determined using volume-related measures.
Plantwide Overhead Rate
A single overhead absorption rate calculated for an entire manufacturing plant, applied uniformly to all units produced.
Volume-related Measures
Metrics that are influenced by or correlate with the volume of production or sales.
- Differentiate between the several overhead allocation approaches (departmental, plantwide, ABC).
- Understand the variance between allocations based on volume and those based on activities for overhead costs.
Verified Answer
BH
Brandon HerreraJul 10, 2024
Final Answer :
True
Explanation :
The plantwide overhead rate is determined by dividing the total estimated manufacturing overhead cost by a volume-related measure, such as direct labor hours, machine hours, or total units produced. This rate is then used to allocate overhead costs to individual products or cost centers based on their respective usage of the volume-related measure.
Learning Objectives
- Differentiate between the several overhead allocation approaches (departmental, plantwide, ABC).
- Understand the variance between allocations based on volume and those based on activities for overhead costs.