Answer:- Activity based costing represents a costing methodology that keenly ide

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Answer:-

Activity based costing represents a costing methodology that keenly identifies activities in a business and then assigns the cost of each of the activity with the resources to services and products based on the consumption levels of each.

On the other hand, the multiple production department factory overhead rate method, the product costing utilizes the multi-production department factory overhead rates that require to identify the factory overhead that is associated with the department of production. The utilization of the rates increases accuracy utilizing the plant-wide factory overhead cost .

Therfore, the activity based costing only requires factory overhead to budget the activity cost pools that are allocated to the products through multiplying activity rates with activity base quantity that is consumed for every product. Activity rates other than multiple production overhead rates are more accurate for product costs when products are consumed in rations unrelated to the allocation bases of departments.

Explanation / Answer

BUSINESS

How does activity-based costing differ from from the multiple production department factory overhead rate method?

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