All right. So, we're going to get started on chapter 17, which is about activity based costing and analysis. So, we've talked about this several times um up to this point, but overhead is always more difficult to um like figure out where it goes, right? So materials and labor if they're direct then those are easily traced to a product or a service right they're very straightforward but then overhead since it's indirect whether we're talking about indirect materials which you can see here or indirect labor which you can see here those are all flowing to factory overhead as well as other overhead costs. Um since those are indirect then they're not easily traced to a product or a service right and we have to find some way to allocate those costs to the the final product or the service that's being offered. And so however we're allocating those um know that those are you know we're allocating applying that's going into work in process and it's flowing through to finished goods and eventually out to cost of goods sold. Anyway um that's the way we're allocating it is determining what the cost of the product or service is. And so we are trying to get the best estimate of the cost. Um since we're allocating those overhead costs then it's not you know exactly right but it's the best estimate. And so there's different ways that we can actually allocate overhead. Um we're actually going to look at three different allocation methods. And some are going to be more accurate depending on, you know, the the company's uh the business environment. Some are going to be more accurate than others or some are going to be more useful than others um depending on what's going on in the process or you know the services being offered. So on the next slide we're going to look at those um different methods that I just me mentioned that can be used to allocate u those factory overhead amounts. Okay. And so here is the summary of those allocation methods. So one is using a plantwide rate. And really as far as like the job order costing chapter um when we were applying overhead we were using a plantwide rate more so I mean that was basically the process that we were using one rate to apply overhead to u all the different jobs that were being worked on. So there's the plantwide rate. We could also use departmental rates or um we could use activity based costing. So what's the difference uh among these different methods? So a plantwide rate that means that we're just using one rate. The rate um is going to be driven by a volumebased measure like direct labor hours, direct labor cost or machine hours. So like the cost driver is it going to be more volume based? Um like I was saying based on one of the like direct labor whether it's cost or hours or machine hours. If we were using a departmental rate that means we're using more than one rate. So two or more um those are also going to be volume based. So again you know direct labor either cost or hours or maybe we're using machine hours. And then the third method is activity based costing. Typically, we're going to be using many rates. So, we're going to be using more than what we would with the departmental rate methods. And the drivers, so the allocation basis for activity based costing are going to be um activities. Whatever the activities are that are being identified in the process, those activities are what we're going to use as the cost drivers and our formulas whenever we develop our rates. So, we're not just going to have one predetermined overhead rate. We're going to have predetermined overhead rates for as many activities as we identify are involved in the process. So, activities drive costs. Some of the activities would be like the number of batches of product produced or maybe like pounds of materials or number of setups or whatever it may be. we're identifying activities and those activities end up being the cost driver or you know when you're putting together your predetermined overhead rate that formula um those activities are the amounts that are in the denominator right so you divide by whatever the estimated activity amounts are. So those are the different methods of allocation that we can use and we're going to talk about these more um as we work throughout this chapter.