Question

In the blank next to each of the following terms, place the letter A through D that corresponds to the description of that term. Some letters are used more than once.

1. Activity-based costing
2. Plantwide overhead rate method
3. Departmental overhead rate method

1. Uses more than one rate to allocate overhead costs to products.
2. Uses only volume-based measures such as direct labor hours to allocate overhead costs to products.
3. Typically uses the most overhead allocation rates.
4. Focuses on the costs of carrying out activities.

Short answer

1. Items (A), (C), and (D).
2. Only item (B).
3. Item (A) and (B).

Step-by-step solution

Step-by-Step SolutionStep 1: Meaning of Departmental Overhead Rate

The departmental overhead rate method is a method in which various rates are used for various departments. Direct labor hour is used to calculate the overhead rate in one department, and machine hours are used to calculate the overhead rate in another department.

(1) Listings things in activity-based costing

1. Uses more than one rate to allocate overhead costs to products.
2. Typically uses the most overhead allocation rates.
3. Focuses on the costs of carrying out activities.

(2) Listings things in the plant-wide overhead rate method

It uses only volume-based measures such as direct labor hours to allocate overhead product costs.

(3) Listing things in the departmental overhead rate method

1. Uses more than one rate to allocate overhead costs to products.
2. Uses only volume-based measures such as direct labor hours to allocate overhead costs to products.