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which of the following is a disadvantage of the departmental overhead rate method? multiple choice the departmental overhead rate method assigns overhead on the basis of volume-related measures. the departmental overhead rate method is more refined than the plantwide overhead rate method. the departmental overhead rate method does not assign overhead on the basis of volume-related measures. the departmental overhead rate method is simpler and less costly to implement than the plantwide rate method. there are no disadvantages of the departmental overhead rate method.

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Many overhead costs that are not driven by production volume may be incorrectly assigned. When each is in charge of multiple products with varying labour and machine hours, the departmental overhead rate will skew.

This is more likely to happen in large departments. This also adds redundancy because each department must measure and calculate its own rate. Advantages: More precise allocation of overhead costs. Controlling overhead costs more effectively. Concentrate on important factors. This method makes production when overhead resources are consumed in significantly different ways by various products across multiple departments. The departmental overhead rate is an expense rate calculated for each department in the manufacturing process of a factory.

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