The overhead rate method which uses a different overhead rate for each department is the:

• A. Activity-based costing method
• B. Job order costing method
• C. Plantwide overhead rate method
• D. Departmental overhead rate method

Answer: (D)

Verified step by step guidance

1. Understand the concept of overhead rate: Overhead rate is used to allocate indirect costs to products or services. It can be calculated using different methods depending on the level of detail required.
2. Review the Departmental Overhead Rate Method: This method assigns overhead costs to products based on the specific overhead rate of each department. It recognizes that different departments may incur different types and amounts of overhead costs.
3. Compare with other methods: The Plantwide Overhead Rate Method uses a single overhead rate for the entire plant, while the Activity-Based Costing Method allocates overhead based on activities, and the Job Order Costing Method assigns costs to specific jobs or orders.
4. Identify the key feature of the Departmental Overhead Rate Method: It uses multiple overhead rates, one for each department, which allows for more accurate allocation of costs based on departmental activities.
5. Conclude that the correct answer is the Departmental Overhead Rate Method, as it matches the description of using a different overhead rate for each department.