Cooper and Kaplan recommend using which of the following as the basis, or denominator, when developing activity cost pool rates for activity based costing.
A)The maximum capacity for each activity.
B)The practical capacity for each activity.
C)The planned or budgeted for each activity.
D)The normal capacity for each activity.

Question

Quizplus · Accepted Answer

Cooper and Kaplan, who are pioneers in the field of Activity-Based Costing (ABC), recommend using the practical capacity of each activity as the basis for developing activity cost pool rates. Practical capacity refers to the maximum amount of work that can be done, taking into account unavoidable interruptions, and it provides a more realistic basis for allocating costs compared to theoretical maximum or normal capacities.

Cooper and Kaplan Recommend Using Which of the Following as the Basis