The First Step in Developing an Activity-Based Costing System Is

question 257

True/False

The first step in developing an activity-based costing system is to identify the activities that will be used to allocate the manufacturing overhead costs.

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Definitions:

Sales

The activity or business of selling goods or services, generating revenue for companies.

Implicit Costs

The opportunity costs of using resources owned by the firm for its own use rather than selling those resources.

Explicit Costs

Direct, out-of-pocket payments for resources employed by firms for production, such as wages or rent.

Accounting Profit

The net income a company reports on the financial statements, calculated by subtracting total expenses from total revenues.