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Departmental overhead rates may not correctly assign overhead costs due to:a

Departmental overhead rates may not correctly assign overhead costs due to:
a. the use of direct labor hours in allocating overhead costs to products rather than machine time or quantity of materials used.
b. The high correlation between direct labor hours and the incurrence of ovehead costs.
c. Overreliance on volume as a basis for allocating overhead costs where product costs differ regarding the number of units produced, lot size, or complexity of production.
d. Difficulties associated with identifiying cost pools and allocating them to activity bases.
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a variety of products.

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