Four basic steps are used in an ABC system. List the proper order of these steps, which are currently scrambled below:
a. Identify the primary activities and estimate a total cost pool for each.
B. Allocate the costs to the cost object using the activity cost allocation rates.
C. Select an allocation base for each activity.
D. Calculate an activity cost allocation rate for each activity.
A) a, c, d, b
B) c, a, b, d
C) b, a, c, d
D) a, d, c, b

Question

Four basic steps are used in an ABC system. List the proper order of these steps, which are currently scrambled below: 
a. Identify the primary activities and estimate a total cost pool for each.
B. Allocate the costs to the cost object using the activity cost allocation rates.
C. Select an allocation base for each activity.
D. Calculate an activity cost allocation rate for each activity.
A) a, c, d, b
B) c, a, b, d
C) b, a, c, d
D) a, d, c, b

Quizplus · Accepted Answer

The correct order for implementing an Activity-Based Costing (ABC) system is: identifying the activities and estimating the total cost pool for each (a), selecting an allocation base for each activity (c), calculating an activity cost allocation rate for each activity (d), and finally allocating the costs to the cost object using the activity cost allocation rates (b).

Four Basic Steps Are Used in an ABC System