If a firm uses activity-based costing to allocate costs, it does all but which of the following?
A) Combine homogeneous costs in appropriate pools.
B) Calculate an appropriate rate for each pool.
C) Select appropriate cost drivers.
D) Apply a volume-related measure per unit of product.
E) Allocate costs based on predetermined rates for cost pools.

Question

Quizplus · Accepted Answer

Activity-based costing does not apply a volume-related measure per unit of product; instead, it allocates costs based on activities and cost drivers, which may not be directly related to volume.

If a Firm Uses Activity-Based Costing to Allocate Costs, It