When using an activity-based costing system, which of the following is the formula for allocating costs to products or services?
A)Activity cost pool resources divided by activity driver
B)Activity cost pool resources times activity driver
C)Activity rate divided by activity driver consumption
D)Activity rate times activity driver consumption

Question

Quizplus · Accepted Answer

The formula for allocating costs to products or services in an activity-based costing system is activity rate times activity driver consumption. This formula takes into account both the cost of each activity (activity rate) and how much of each activity is consumed by a particular product or service (activity driver consumption). Therefore, option D is the correct formula.

When Using an Activity-Based Costing System, Which of the Following