A stapler manufacturer uses a single plantwide predetermined overhead allocation rate to allocate its indirect costs. The CFO thinks this process could be inaccurate. Which of the following statement is​ incorrect, if the manufacture makes the transition to using multiple predetermined overhead allocation​ rates?   A. The allocation process changes because there are now multiple cost pools and multiple allocation bases.   B. Management must analyze the expected overhead costs and separate them into a cost pool for each department.   C. In selecting machine usage as the primary cost driver for the Production​ Department, management feels that there is a direct relationship between the number of machine hours used and the amount of overhead costs incurred.   D. The use of multiple predetermined overhead allocation rates is more​ complex, but it may be more accurate.

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Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit.  Overhead expenses depend upon the nature of the business operations.