what are the three factory overhead allocation methods? what are the three commo

Question

what are the three factory overhead allocation methods? what are the three common allocation basses? Using multiple department factory overhead rate instead of single plantewide factory overhead rate results in what? what can be used as allocation bases for calculating factory overhead rates? What are two most common allocation bases for calcutating factory overhead rates? what is the various typess of cost pools used with the activity - based costing methods? what is the formula for determining the activity rates?

Explanation / Answer

(1)

The Three Factory Overhead allocation methods are : Absorption basis, Activity base and Blanket Rate

(2)

These are the three common allocation basis :

Allocating Manufacturing Overhead Via Direct Labour   

Allocation on the basis on Machine hours and on the basis of direct Labour Rate

(3) Using multiple department factory o/h rate results in better and more accurate allocation.

(4)

An activity-based costing rate is calculated by assigning indirect costs to a cost pool, adding the costs included in that cost pool together, then dividing the cost pool total by the cost driver.

Cost Pool Total ÷ Cost Driver

(5)

The Various types of Cost pools are :

Overheads, Indirect Labour, Indirect Material

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