1. Under what two conditions would the multiple production department factory overhead rate method provide more accurate product costs than the single plantwide factory overhead rate method?

2. How does activity-based costing differ from the multiple production department factory overhead rate method?

3. Shipping, selling, marketing, sales order processing, return processing, and advertising activities can be related to products by using activity-based costing. Would allocating these activities to products for financial statement reporting be acceptable according to GAAP?

4. When might activity-based costing be preferred over using a relative amount of product sales in allocating selling and administrative expenses to products?

5. How can activity-based costing be used in service companies?