The First Step in Activity-Based Costing Is to

question 38

Multiple Choice

The first 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:

Decentralisation

The distribution of decision-making powers from central authority to lower-level employees or divisions in an organization.

Goal Congruence

A condition in which the goals of the company's various employees and departments align with the overall objectives of the organization.

Motivation

The internal and external factors that stimulate desire and energy in people to be continually interested and committed to a job or subject.

Suboptimal Decision

A choice made that is not the best or most effective among the alternatives considered.