Four Basic Steps Are Used in an ABC System

question 79

Multiple Choice

Four basic steps are used in an ABC system. List the proper order of these steps, which are currently scrambled below:
A. Identify the primary activities and estimate a total cost pool for each.
B. Allocate the costs to the cost object using the activity cost allocation rates.
C. Select an allocation base for each activity.
D. Calculate an activity cost allocation rate for each activity.

• A)c, a, b, d
• B)a, c, d, b
• C)b, a, c, d
• D)a, d, c, b

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Definitions:

Bond

A financial device signifying a loan provided by an investor to a borrower, usually in the form of corporations or government entities.

Buyer Pays

A term indicating that the buyer is responsible for the costs of goods shipping, insurance, and any related expenses incurred until delivery is complete.

Accrued Interest

Interest that has accumulated over time but has not yet been paid or received.

Bond Indenture

A legal contract between a bond issuer and a bondholder that specifies the terms of the bond, such as its maturity date, face value, coupon rate, and any special features.