Plant wide overhead rate method: Plant wide overhead rate is the method which uses total overhead costs incurred during the production and the allocation base that is total direct labor hours, to determine overhead rate. Departmental Overhead Rate Method: Departmental overhead rate represents proportion of estimated overhead of a particular department and estimated level of activities within the same department. To explain: Advantages of plant wide and departmental overhead rate method. Solution: Advantages of plant wide overhead rate method, This method is consistent with GAAP. It can be used for external reporting requirements. In such method data or information is readily available which makes it easy to use. Advantages of departmental overhead rate method, This method of overhead determination is useful where number of departments is large. This method provides ease with respect to ascertaining accurate overhead rate. It can be used for proper reporting presentation as well. Hence, both plant wide and departmental overhead rate method are beneficial methods.

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