The Last Step in Activity-Based Costing Is to

question 22

Multiple Choice

The last step in activity-based costing is to

• A) assign overhead costs to products, using overhead rates determined for each cost pool.
• B) compute the activity-based overhead rate per cost driver.
• C) identify and classify the activities involved in the manufacture of specific products, and allocate overhead to cost pools.
• D) identify the cost driver that has a strong correlation to the activity cost pool.

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Definitions:

Simple Linear Regression

A statistical method that models the linear relationship between a single independent variable and a dependent variable by fitting a linear equation to observed data.

Slope

The rate of change in the variable on the y-axis per unit change in the variable on the x-axis in a linear equation.

First-order

Generally pertains to the most basic or primary level of something, often used in mathematical and logical expressions indicating the initial or simplest case.

Least Squares Method

The least squares method is a statistical technique used to determine the best-fit line for a set of data, by minimizing the sum of the squares of the differences between observed and estimated values.