To use activity-based costing, it is necessary to know the
A) cost driver for each activity cost pool.
B) estimated use of cost drivers per activity.
C) estimated use of cost drivers per product.
D) all of the above.

Question

Quizplus · Accepted Answer

Activity-based costing involves identifying and grouping activities into cost pools, determining cost drivers for each cost pool, and then allocating costs to products based on their estimated use of the identified cost drivers. Therefore, to use activity-based costing, it is necessary to know the cost driver for each activity cost pool, the estimated use of cost drivers per activity, and the estimated use of cost drivers per product. Hence, option D (all of the above) is the best choice.

To Use Activity-Based Costing, It Is Necessary to Know the