Question

which of the following is a disadvantage of the departmental overhead rate method? multiple choice it may fail to accurately assign many overhead costs that are not driven by production volume. allows each department to have its own overhead rate. allows each department to have its own allocation base. the departmental overhead rate is usually more accurate in overhead allocations than the plantwide overhead rate. the departmental overhead rate is consistent with gaap and can be used for external reporting.

Explanation:

The departmental overhead rate method assumes costs are driven by production - volume related factors in each department. But many overhead costs like administrative or R&D costs may not be related to production volume, leading to inaccurate cost assignment. The other options are either advantages of the method or incorrect statements.

Answer:

It may fail to accurately assign many overhead costs that are not driven by production volume.