To assign overhead costs to each product, the company
A) multiplies the activity-based overhead rates per cost driver by the number of cost drivers estimated to be used per product.
B) multiplies the overhead rate by the number of direct labor hours used on each product.
C) assigns the cost of each activity cost pool in total to one product line.
D) multiplies the rate of cost drivers per estimated cost for the cost pool by the estimated cost for each cost pool.

Question

Quizplus · Accepted Answer

Activity-based costing (ABC) involves identifying the activities required to produce a product and assigning costs to each activity based on its use of resources. To assign overhead costs to each product, the company multiplies the activity-based overhead rates per cost driver by the number of cost drivers estimated to be used per product. This method provides a more accurate and detailed calculation of overhead costs than simply using direct labor hours or assigning the cost of each activity cost pool to one product line.

To Assign Overhead Costs to Each Product, the Company