The first step in activity-based costing is to
A)assign manufacturing overhead costs for each activity cost pool to products.
B)calculate the activity-based overhead rate per cost driver.
C)identify and classify the major activities involved in the manufacture of specific products.
D)identify the cost driver that has a strong correlation to the activity cost pool.

Question

Quizplus · Accepted Answer

The first step in activity-based costing is to identify and classify the major activities involved in the manufacture of specific products. This step involves analyzing the various activities that go into producing a product and grouping them into activity cost pools. Only after the activities have been identified and classified can we move on to assigning costs to these activity cost pools and calculating the activity-based overhead rate per cost driver. So, option C is the correct choice.

The First Step in Activity-Based Costing Is to