Departmental Overhead Rates May Not Correctly Assign Overhead Costs Due

question 74

Multiple Choice

Departmental overhead rates may not correctly assign overhead costs due to:

• A)the high correlation between direct labour-hours and the incurrence of overhead costs.
• B)the use of direct labour-hours in allocating overhead costs to products rather than machine time or quantity of materials used.
• C)difficulties associated with identifying cost pools for the first stage of the allocation process.
• D)overreliance on volume as a basis for allocating overhead costs where products differ regarding the number of units produced, lot size, or complexity of production.

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