What is the last step in developing an ABC system?
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.

Question

Quizplus · Accepted Answer

The last step in developing an ABC system is to allocate the costs to the cost object using the activity cost allocation rates. This is when the total costs from each cost pool are divided by the total activity levels for each respective activity to determine the activity cost allocation rate. Once this rate is determined for each activity, it can be used to assign costs to the cost objects based on the amount of activity they consume.

What Is the Last Step in Developing an ABC System