Question

In an effort to simplify the multiple production department factory overhead rate method, the same rate can be used for all departments.
A. True
B. False

Answer 1

Answer: False

Explanation:

Different departments incur different types of costs based on the product that they are producing. It would therefore not be right to use the same rate for all departments as it might capture cost inadequately.

The overhead rate should always take into account the unique circumstances of a department such that costs can be assigned as accurately as possible.