If a firm has implemented activity-based procedures for home office expenses, it will
A) allocate all home office expenses on the basis of sales revenues.
B) allocate all home office expenses to homogeneous cost pools.
C) allocate the costs in a pool using a predetermined rate per unit of activity.
D) both a and b.

Question

Quizplus · Accepted Answer

Activity-based procedures involve allocating costs to specific activities, which are then used to allocate costs to the products or services that use them. This is typically done by using predetermined rates per unit of activity. Therefore, only choice C correctly reflects the implementation of activity-based procedures for home office expenses. Choices A and B do not consider specific activities or units of activity, and thus are not consistent with activity-based costing.

If a Firm Has Implemented Activity-Based Procedures for Home Office