The following items are used in tracing costs in an ABC system. In which order are they used?
A) 1, 2, 3, 4
B) 2, 3, 4, 1
C) 2, 4, 3, 1
D) 4, 3, 1, 2

Question

The following items are used in tracing costs in an ABC system. In which order are they used? 
A) 1, 2, 3, 4 
B) 2, 3, 4, 1 
C) 2, 4, 3, 1 
D) 4, 3, 1, 2

Quizplus · Accepted Answer

In ABC system, costs are traced by identifying activities first (2), then identifying cost drivers (4) for those activities, assigning costs to those cost drivers (4), and finally assigning costs to the products based on their usage of those cost drivers (1). Therefore, the correct order is 2, 4, 3, 1.

The Following Items Are Used in Tracing Costs in an ABC