What will be the effect when a firm implements activity-based procedures for home office expenses?
A)They will allocate all home office expenses on the basis of sales revenues.
B)They will allocate all home office expenses to homogeneous cost pools.
C)They will allocate the costs in a pool using a predetermined rate per unit of activity.
D)They will allocate the costs in a pool using the actual rate per unit of activity.

Question

Quizplus · Accepted Answer

The implementation of activity-based procedures for home office expenses allows for the allocation of costs in a pool using a predetermined rate per unit of activity. This is because activity-based costing involves identifying and measuring the cost drivers that contribute to specific activities, and then assigning those costs to products, services, or departments based on how much of those activities they consume. Therefore, using a predetermined rate per unit of activity ensures that home office expenses are allocated fairly and accurately based on the specific activities that contribute to those expenses.

What Will Be the Effect When a Firm Implements Activity-Based