Which of the following shows the steps required to implement activity-based costing in the correct order?
A)Allocate overhead costs to products;identify costly activities to complete products;assign overhead costs to activities;identify cost drivers for each activity;and calculate a predetermined overhead rate for each activity.
B)Allocate overhead costs to products;identify cost drivers for each activity;assign overhead costs to activities;identify costly activities to complete products;and calculate a predetermined overhead rate for each activity.
C)Identify costly activities to complete products;assign overhead costs to activities;identify cost drivers for each activity;calculate a predetermined overhead rate for each activity;and allocate overhead costs to products.
D)Identify cost drivers for each activity;assign overhead costs to activities;identify costly activities to complete products;calculate a predetermined overhead rate for each activity;and allocate overhead costs to products.
E)None of the answer choices is correct.

Question

Quizplus · Accepted Answer

Activity-based costing (ABC) involves identifying the activities required to produce a product (step 1), assigning costs to these activities (step 2), identifying the cost drivers for each activity (step 3), calculating a predetermined overhead rate for each activity based on these cost drivers (step 4), and finally allocating the overhead costs to products based on their consumption of activities (step 5). This sequence is accurately represented in option C.

Which of the Following Shows the Steps Required to Implement