Activity-Based Costing Uses a Number of Activity Cost Pools, Each

question 66

True/False

Activity-based costing uses a number of activity cost pools, each of which is allocated to products on the basis of direct labor-hours.

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Definitions:

Direct Labor

Costs of wages for employees who physically produce products or serve customers directly.

Process Costing System

An accounting system used when products are identical and it's impractical to track individual costs, totaling costs for a period and spreading them evenly across all units produced.

Journal Entry

A record that keeps the financial transactions of a business in chronological order as they occur.

Process Costing System

An accounting methodology used in industries where production is continuous, assigning costs to units of product based on the process they go through.