Which of the following statements is not correct concerning multiple overhead rate systems? A) A multiple overhead rate system is more complex than a system based on a single plantwide overhead rate. B) A multiple overhead rate system is usually more accurate than a system based on a single plantwide overhead rate. C) A company may choose to create a separate overhead rate for each of its production departments D) In departments that are relatively labor-intensive, their overhead costs should be applied to jobs based on machine-hours rather than on direct labor-hours.

Question

Jordan Ferrell

Business

7 November, 20:16

Which of the following statements is not correct concerning multiple overhead rate systems? A) A multiple overhead rate system is more complex than a system based on a single plantwide overhead rate. B) A multiple overhead rate system is usually more accurate than a system based on a single plantwide overhead rate. C) A company may choose to create a separate overhead rate for each of its production departments D) In departments that are relatively labor-intensive, their overhead costs should be applied to jobs based on machine-hours rather than on direct labor-hours.

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Cedric Duffy · Answer 1

D) In departments that are relatively labor-intensive, their overhead costs should be applied to jobs based on machine-hours rather than on direct labor-hours.

Explanation:

When a company is using a multiple overhead rate system, it assigns different predetermined overhead rates to each department or unit of a factory, instead of having one single overhead rate for the whole manufacturing process. The main advantage of using a multiple overhead rate system is increased accuracy, while its main disadvantage is the increased complexity of the system.