In implementing an activity-based costing system, once the activity pools have been determined, manufacturing overhead costs can be assigned to them.This is referred to as
A)predetermined overhead allocation.
B)overhead application.
C)first-stage allocation.
D)activity allocation.

Question

Quizplus · Accepted Answer

Once the activity pools have been determined, manufacturing overhead costs can be assigned to them in the first-stage allocation, also known as the cost allocation process. This initial assignment of overhead costs is necessary before the overhead application, which involves calculating the overhead rate for each activity pool and applying them to the actual usage of the activities in their respective departments. Predetermined overhead allocation is a method of assigning overhead costs based on estimates of activity levels, while activity allocation is a general term referring to the assignment of costs to specific activities. Therefore, the best choice is C, first-stage allocation.

In Implementing an Activity-Based Costing System, Once the Activity Pools