Question

QS 04-6 Advantages of plantwide and departmental rate methods LO A1 Which of the following are advantages of the plantwide and departmental overhead rate methods? Indicate advantages with A and disadvantages with D. 1. They are based on readily available information. 2. They can be used for external financial reporting. 3. Overhead costs are too complex to be explained by only one factor. 4. They violate GAAP. 5. They are easy to implement.

Answer 1

Serial No.	Particualrs	D/A
1	They are based on readily available information.	A
2	They can be used for external financial reporting.	A
3	Overhead cost are too complex to be explained by only one factor.	D
4	They violated GAAP.
5	They are easy to implement.	A

Point No.4 is deliberately keeping blank, because Plantwide and Departmental rate method consistent with GAAP and it's not violates GAAP. Even you can see in Above Table point No.2, Advantage of this method is "They can be used for external financial reporting" which is possible due to compliance with GAAP.