Which of the Following Is the Step in Implementing an Activity-Based

question 124

Multiple Choice

Which of the following is the step in implementing an activity-based costing system that can generate the greatest error?

• A)Identifying activities
• B)Developing activity cost pools
• C)Calculating activity cost pool rates
• D)Calculate the unit product cost

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Definitions:

FIFO Method

First-In, First-Out method, an inventory valuation method where the first items purchased are the first ones sold, used in calculating cost of goods sold.

Ending Inventory

The value of goods available for sale at the end of an accounting period, calculated as beginning inventory plus purchases minus cost of goods sold.

Periodic Inventory System

A method of inventory valuation in which physical inventory is counted at specific intervals and cost of goods sold is calculated periodically.

Specific Invoice Method

An accounting approach to valuing inventory that tracks the cost of each specific item in inventory and is sold.