Asked by Keletso J. Letsholo on May 14, 2024
Verified
Departmental overhead rates applied on the basis of a volume measure such as direct
labour-hours or machine-hours will eliminate any distortions in unit costs due to product diversity.
Departmental Overhead Rates
Specific overhead rates assigned to different departments within a company, reflecting the unique costs incurred by each department.
Direct Labour-hours
Direct labour-hours refer to the amount of time spent by workers directly involved in the production process, used to allocate labour costs to units of output.
Machine-hours
A measure of production output or activity based on the number of hours machines are operating.
- Differentiate between traditional costing and activity-based costing systems.
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Learning Objectives
- Differentiate between traditional costing and activity-based costing systems.
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