If a firm uses activity-based costing to allocate costs,it does all but which of the following?
A)Combine homogenous costs in appropriate pools.
B)Select appropriate cost drivers.
C)Calculate an appropriate rate for each pool.
D)Allocate costs based on predetermined rates for cost pools.
E)Apply a volume-related measure per unit of product.

Question

Quizplus · Accepted Answer

Activity-based costing does not necessarily apply a volume-related measure per unit of product, as this approach focuses on identifying and allocating costs based on different activities that contribute to the production or delivery of a product or service. The other options, which involve pooling costs by activity, selecting cost drivers, calculating rates, and allocating costs based on predetermined rates, are all typical steps in activity-based costing.

If a Firm Uses Activity-Based Costing to Allocate Costs,it Does