Wycliff Corporation manufactures several different styles of bicycles.

Wycliff Corporation usescost pools for assembly and shipping to calculate a predetermined overhead rate for each department. This means the company calculates separate overhead rates for different departments (in this case, assembly and shipping) rather than using a single rate for the entire plant or allocating overhead based on individual activities.

According to Saylor Direct Credit Courses in Managerial Accounting (BUS105),Departmental Overhead Rate Methodis defined as follows:

"When a company has more than one department that incurs manufacturing overhead costs, it may be more accurate to use a departmental overhead rate for each department. Each department establishes its own overhead rate by dividing the total overhead costs for that department by the total amount ofits allocation base (such as machine hours or direct labor hours)."

(Reference: Saylor Academy BUS105, Unit 3: How Is Job Costing Used to Track Production Costs? Section 3.4 “Departmental and Plantwide Overhead Rates”)

This isdifferentfrom:

Activity-Based Costing (A), which uses multiple cost pools based on different activities, not necessarily departments.

Plantwide Rate (C), which uses a single overhead rate for the entire plant.

Process Costing (D), which is used for mass production of similar products, not overhead allocation per department.

Wycliff’s system fits theDepartmentalmethod, as they allocate costs bydepartment(assembly and shipping) rather than by activity (activity-based) or across the whole plant (plantwide).