An Activity-Based Costing System Is Developed in Four Steps

question 79

Multiple Choice

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

Quality

The standard of something as measured against other similar things; a degree or level of excellence.

Perfect Competition

A market structure characterized by a large number of small firms, homogeneous products, and free entry and exit, leading to price-taking behavior.

Standardized Product

Output of different producers regarded by consumers as the same good; also referred to as a commodity.

Easy Entry And Exit

Characteristics of a market where companies can freely enter or leave without significant barriers or costs.