An Activity-Based Costing System Is Developed in Four Steps

question 90

Multiple Choice

An activity-based costing system is developed in four steps. a. Compute the allocation rate for each activity
B. Identify activities and estimate their total costs
C. Identify the cost driver for each activity and then estimate the quantity of each driver's allocation base
D. Allocate the indirect costs to the cost object
Which of the following is the correct order of performing these steps?

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

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Definitions:

Direct Costs

Expenses that can be directly attributed to the production of specific goods or services, such as labor and materials.

Annual Fixed Cost

Fixed costs that a business incurs over a year regardless of its activity level, such as rent, salaries, or insurance.

Technology Use

The application of scientific knowledge for practical purposes, especially in industry and daily life.

Time Efficiency

Refers to the effective use of time to maximize productivity or achieve a task within the shortest possible duration.