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Question 1: Determine if the overhead allocated to the product relates to a single plantwide overhead rate method, multiple production department factory overhead rate method, or activity-based costing method.
Product A: $210 allocated by number of setups, $325 allocated by number of purchase orders, and $220 allocated by number of engineering hours.
Product B: $284 allocated by direct labor in Department Z and $590 allocated by machine hours in Department Y.
Product C: $475 allocated by machine hours.
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This individual assignment is based on the TerraCycle Inc.
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A new plant accountant suggested that the company may be able to assign support costs to products more accurately by using an activity based costing system that relies on a separate rate for each manufacturing activity that causes support costs.
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