From a purely product-costing standpoint,department rates and activity-cost-driver rates will give the same product costs if significant costs are incurred for different activities within a department but different outputs use resources from the different activities in the same proportions.

Question

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If different activities within a department incur significant costs and different outputs use resources from the activities in the same proportions, then both department rates and activity-cost-driver rates will give the same product costs. This is because the costs will be allocated based on the same proportions of resource usage, whether at the department level or at the activity level.

From a Purely Product-Costing Standpoint,department Rates and Activity-Cost-Driver Rates Will