Chapter 26, Problem 5DQ

To determine

Activity-based costing (ABC) method: The costing method which allocates overheads to the products based on factory overhead rate for each activity or cost object, according to the cost pooled for the cost drivers (allocation base).

Multiple production department factory overhead rate: This allocation method identifies different departments in the process of production. The factory overheads are allocated to products based on the overhead rate for each of the production departments.

To explain: The difference between ABC method and multiple production department overhead rate method.