Thefirst Step in Activity-Based Costing (ABC)is to

question 99

Multiple Choice

Thefirst step in activity-based costing (ABC) is to

• A)identify the activities that consume resources,and assign costs to those activities.
• B)identify the cost driver(s)associated with each activity.
• C)compute a cost rate per cost driver unit.
• D)assign costs to products by multiplying the cost driver rate by the volume of cost drivers consumed by the product.

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Definitions:

Subsidiary

A company that is controlled by another company, known as the parent company, through ownership of more than half of its voting stock.

Fixed Assets

Long-term tangible assets used in operation of a business that are unlikely to be converted into cash within a short period.

Consolidated Financial Statements

Financial statements that represent the aggregate financial position and results of operations for a parent company and its subsidiaries as a single economic entity.

Combined Entity

A business entity that results from the combination of two or more separate entities through merger, acquisition, or another method, leading to consolidation for financial reporting purposes.