The following items are used in tracing costs in an ABC system.In which order are they used?
(1) cost object
(2) cost driver
(3) activity driver
(4) cost pool
A)1,2,3,4
B)2,3,4,1
C)2,4,3,1
D)4,3,1,2

Question

Quizplus · Accepted Answer

In an ABC system, the sequence of items used to trace costs is as follows:
1. Cost pool - which refers to a specific activity or group of activities
2. Cost driver - which is the factor that causes the activity cost to be incurred
3. Activity driver - which is used to measure the level of activity that causes the cost driver to be incurred
4. Cost object - which is the product, service, or customer that incurs the cost.

Therefore, the correct order is 2, 4, 3, 1, which is represented by choice C.

The Following Items Are Used in Tracing Costs in an ABC