An activity-based costing system is developed in four steps: a.Compute the predetermined overhead allocation rate for each activity.
B.Identify activities and estimate their total costs.
C.Identify the cost driver for each activity and then estimate the quantity of each driver's allocation base.
D.Allocate the indirect costs to the cost object.
Which of the following is the correct order for performing these steps?
A)a,b,c,d
B)c,a,b,d
C)b,c,a,d
D)b,a,c,d

Question

Quizplus · Accepted Answer

The correct order is to first identify activities and estimate their total costs (b), then identify the cost driver for each activity and estimate the quantity of each driver's allocation base (c), compute the predetermined overhead allocation rate for each activity (a), and finally allocate the indirect costs to the cost object (d).

An Activity-Based Costing System Is Developed in Four Steps: A the Predetermined