Objectives:

$1.$ Explain cost flows for activity$-$based costing.

$2.$ Describe the four types of activities that cause overhead costs.

$3.$ Identify and assess advantages and disadvantages of the plantwide overhead and departmental overhead rate

methods.

$4.$ Identify and assess advantages and disadvantages of activity$-$based costing.

$5.$ Allocate overhead costs to products using the plantwide, departmental and activity$-$based costing.

Why is overhead allocation under ABC usually more accurate than either the plant wide overhead

allocation method or the departmental overhead allocation method?