Which best describes the flow of overhead costs in an activity-based costing system?
A)Overhead costs  direct labour cost or hours  products
B)Overhead costs  products
C)Overhead costs  activity cost pools  cost drivers  products
D)Overhead costs  machine hours  products

Question

Quizplus · Accepted Answer

In activity-based costing system, overhead costs are allocated to activity cost pools based on the cost driver for each specific activity. Then, the activity cost pools are allocated to products based on the usage of each activity by the product. Therefore, the flow of overhead costs is from overhead costs to activity cost pools to cost drivers to products.

Which Best Describes the Flow of Overhead Costs in an Activity-Based