The first step from the list below in the process of allocating indirect costs is to:
A)identify a cost driver that has a strong correlation to the cost pool.
B)compute the indirect cost rate per cost driver.
C)allocate the indirect costs to each cost object.
D)decide on the number of indirect cost pools.

Question

Quizplus · Accepted Answer

The first step in allocating indirect costs is to decide on the number of indirect cost pools. This involves grouping indirect costs into logical categories based on the activities that drive those costs. Once the cost pools are identified, the cost driver that has a strong correlation to each pool can be determined, and then the indirect cost rate per cost driver can be computed. Finally, the indirect costs can be allocated to each cost object based on their usage of the cost drivers.

The First Step from the List Below in the Process