CA Inter P4 · Chapter 4 · Question 6 of 11
A single overhead absorption rate computed for the factory as a whole and applied to all products is called a:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Blanket overhead rate
Explanation
A blanket (single) rate = total factory overheads / total base for the whole factory. It is simple but suitable only where products pass through all departments uniformly. Departmental rates are more accurate when products use departments differently.
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