Single Plantwide method

Understanding Business
12th Edition
ISBN:9781259929434
Author:William Nickels
Publisher:William Nickels
Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment
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 When is the Single Plantwide method preferred over the Multiple Department method, if ever?

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A plantwide overhead rate is a way of distributing manufacturing overhead costs to the costs of the business's goods and cost objects.

It often fits small businesses and has a straightforward cost structure.
However, there are a few circumstances where its use is appropriate:
  • The overall amount of the overhead expenses that must be allocated is insufficiently global.
  • It is not necessary to use several allocation rates to drive a higher degree of allocation.
  • The company's numerous sections all offer a similar kind of service.
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