The First Step in Developing an ABC System Is

question 9

Multiple Choice

The first step in developing an ABC system is

• A)calculate an activity cost allocation rate for each activity.
• B)allocate the costs to the cost object using the activity cost allocation rates.
• C)select an allocation base for each activity.
• D)identify the primary activities and estimate a total cost pool for each.

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Definitions:

Job Order Costing System

An accounting method used to track the production costs (materials, labor, and overhead) for specific jobs or batches of product.

Service Organizations

Companies that provide services rather than tangible goods to customers, focusing on professional skills and expertise.

Job Order Cost System

An accounting system that tracks costs individually for each job rather than using a standard rate, suitable for customized job production.

Service Organizations

Businesses that provide intangible products or services and typically create value for customers through service delivery.