Question

When using a single plantwide overhead rate, support department costs are separated from all other overhead costs in the application process.

True

False

Answer 1

Solution :

Solution:

When using a single plantwide overhead rate, support department costs are not separated from all other overhead costs in the application process. The support department costs are included in the total overhead costs.

The Plantwide overhead rate can be calculated as follows :

Plantwide overhead rate = Total overheads cost ( Including support deparment costs) / Activity base

The activity base for a single plantwide overhead rate can be the number of machine hours used, the number of labour hours used, production hours and the like.

Thus the statement is false.