Departmental overhead rates are used to assign the support department expenses that are given to the producing departments for specific goods. The right response in this case is option A.
The cost rate for each department in a factory manufacturing process is known as the departmental overhead rate. When distinct departments carry out certain actions to accomplish the end process, the departmental overhead rate varies at each stage of the manufacturing process.
Divide the indirect expenses by the direct costs, then multiply the result by 100 to get the overhead rate. A 20% overhead rate indicates that 20% of sales are spent on the creation of goods or the provision of services. The efficiency and increased earnings are indicated by a decreased overhead rate.
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