After all activity costs are accumulated in an activity cost pool account,overhead rates are computed and costs are allocated to cost objects based on:
A)Direct factors.
B)Indirect factors.
C)Cost drivers.
D)Joint cost principles.
E)Opportunity cost principles.

Question

Quizplus · Accepted Answer

Activity costs are allocated to cost objects based on cost drivers, which are the factors that cause or influence the activity costs. Cost drivers can be direct, such as machine usage for a manufacturing process, or indirect, such as the number of invoices processed for an accounting department. By allocating costs based on the activity's cost driver, the resulting overhead rate is more accurate and reflective of the actual cost of the activity.

After All Activity Costs Are Accumulated in an Activity Cost