Question: There are three overhead allocation methods. 1) single plant-wide factory overhead rate; 2) multiple production department overhead rates; 3) activity-based costing. How do you know

There are three overhead allocation methods. 1) single plant-wide factory overhead rate; 2) multiple production department overhead rates; 3) activity-based costing. How do you know when to use which overhead allocation method? Why wouldn't I just use the actual overhead cost and avoid making an allocation altogether?

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