To Use Activity-Based Costing, It Is Necessary to Know the

question 41

Multiple Choice

To use activity-based costing, it is necessary to know the

• A)cost driver for each activity cost pool.
• B)expected use of cost drivers per activity.
• C)expected use of cost drivers per product.
• D)all of the above.

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Definitions:

Machine-Hours

A gauge for the level of production or activity, calculated through the duration machines are in use.

Manufacturing Overhead

Indirect costs related to manufacturing that are not directly tied to specific units produced, such as maintenance and utilities.

Machine-Hours

A unit of measure representing the operation of one machine for one hour, used in allocating manufacturing costs.

Predetermined Overhead Rate

It's a rate used to allocate manufacturing overhead based on a particular activity (like labor hours or machine hours).