The first step in developing an ABC system is to:
A) allocate costs to activity cost pools.
B) identify the cost driver that has the best "cause-and-effect relationship" to the cost pool.
C) identify essential activities and the cost of performing those activities.
D) calculate activity rates.

Question

Quizplus · Accepted Answer

The first step in developing an ABC system is to identify the essential activities and the cost of performing those activities. This involves identifying all the activities that consume resources in an organization and determining the cost of each activity. Once the cost of each activity is identified, it can be allocated to various products or services based on how much of each activity is consumed by each product or service. Identifying the cost driver and calculating activity rates come later in the ABC system development process.

The First Step in Developing an ABC System Is To