5. Comment on the difference in the per-unit overhead allocated to each product under the multiple production department factory overhead rate and activity-based costing methods.

The activity-based overhead allocation reveals that

snowboardsskis

consume more factory overhead on a per-unit basis than do

snowboardsskis

. The

activity-basedmultiple production department factory overhead rate

method does not show this because all factory overhead is assumed to be proportional to direct labor hours. The

activity-basedmultiple production department factory overhead rate

method separately accounts for the production control and materials handling activity costs. Snowboards have more production control and materials handling activities than do skis. This is because snowboards are made in smaller lots, representing a wide variety of styles. Thus, snowboards have higher activity costs per unit than skis.