overhead LLAs In problem 12 of Chapter 9 you examined an activity based costing procedure in which overhead categories were allocated to products based on a diverse set of independent variables (direet labor, direet material, setups, inventory transactions, and eomplexity). Now suppose each product is manufaetured in a separate department.

For any given department, then, we would have locally ineurred manufacturing costs coupled with allocated overhead costs. For managerial evaluation purposes, is the organization better off allocating overhead to these departments using the LLAs in the earlier problem or using a firm-wide allocation procedure. Explain your reasoning.

AppendixLO1