The First Step in Activity-Based Costing Is to Assign Overhead

question 94

True/False

The first step in activity-based costing is to assign overhead costs to products, using cost drivers.

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Definitions:

Differential Cost

The amount of increase or decrease in cost expected from a particular course of action compared with an alternative.

Variable Costs

Costs that vary in proportion to changes in the activity base.

Differential Cost

The difference in total cost that will result from selecting one alternative over another in decision-making situations.

Intermediate Product

A product that requires further processing before it is considered a finished good ready for sale to consumers.