The first step in activity-based costing is to
A) assign overhead costs to products, using overhead rates determined for each cost pool.
B) compute the activity-based overhead rate per cost driver.
C) identify and classify the activities involved in the manufacture of specific products, and allocate overhead to cost pools.
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 activities involved in the manufacture of specific products, and allocate overhead to cost pools. This is done prior to assigning overhead costs to products using overhead rates determined for each cost pool. The cost driver is determined later in the process.

The First Step in Activity-Based Costing Is to