An activity center:
A) is an organizational structure where companies are organized into related activities and the overhead costs associated with performing these activities are combined into cost pools.
B) combines overhead costs into cost pools.
C) is an organizational structure associated with minimal record-keeping tasks.
D) None of these answers is correct.

Question

Quizplus · Accepted Answer

To reduce record-keeping costs,companies group related activities into hubs called activity centers.The overhead costs of these related activities are combined into a cost pool for each activity center.Because the activities assigned to each center are related,a business can obtain rational cost allocations using a common cost driver for an entire cost pool.

An Activity Center