Activity Based Costing: Method of recognizing activities in the organization and allotment of cost of each activity thereto is known as activity based costing. Plant Wide Overhead Rate: Plant wide overhead rate is the method which uses total overhead costs incurred during the production and the allocation base that is total direct labor hours, to determine overhead rate. Departmental Overhead Rate: Departmental overhead rate uses estimated overhead of a particular department by dividing its estimated level of activities within the same department. To identify: Correct options.

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Chapter 17, Problem 1QS

To determine

Activity Based Costing:

Method of recognizing activities in the organization and allotment of cost of each activity thereto is known as activity based costing.

Plant Wide Overhead Rate:

Plant wide overhead rate is the method which uses total overhead costs incurred during the production and the allocation base that is total direct labor hours, to determine overhead rate.

Departmental Overhead Rate:

Departmental overhead rate uses estimated overhead of a particular department by dividing its estimated level of activities within the same department.

To identify: Correct options.

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