Friday, February 26, 2010

Plantwide Overhead Rate

The Plant-wide overhead rate is used by companies as a single overhead rate that is used throughout all production departments in a specific plant. It is popular for companies to use multiple overhead rates rather than plantwide overhead rates to more accurately distribute overhead costs among produced products.

It is a good idea to use multiple overhead rates in manufacturing situations when one department is machine intensive and another department is more labor intensive in its production techniques.

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