Which of the Following Is Not a Step in Designing

question 23

Multiple Choice

Which of the following is not a step in designing a product costing system?

• A)Determine how to form cost pools.
• B)Identify which cost pools to allocate.
• C)Identify the cost driver to use for allocating each cost pool.
• D)Determine the appropriate denominator volume of each cost driver to calculate allocation rates.
• E)All of the above are steps in designing a product costing system.

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Definitions:

Ideal Standards

Benchmark levels of performance set under perfect operating conditions, used for budgeting and measuring efficiency.

Materials Price Variance

The difference between the actual cost of materials and the standard or expected cost.

Standard Costs

Predetermined costing used in budgeting and decision-making, representing an expected cost under normal conditions.

Overhead Volume Variance

The difference between the budgeted overhead based on standard hours allowed and the actual overhead incurred, due to differences in activity levels.