Which of the following is the proper sequence of events in an activity-based costing system?
A) Identification of cost drivers, identification of cost pools, calculation of pool rates, assignment of cost to products.
B) Identification of cost pools, identification of cost drivers, calculation of pool rates, assignment of cost to products.
C) Assignment of cost to products, identification of cost pools, identification of cost drivers, calculation of pool rates.
D) Calculation of pool rates, identification of cost drivers, identification of cost pools, assignment of cost to products.
E) None of the other answers is correct.

Question

Quizplus · Accepted Answer

The first step in activity-based costing (ABC) is to identify the cost pools, which are groups of costs that are associated with a similar activity. The next step is to identify the cost drivers, which are the factors that cause the costs to be incurred. Once the cost drivers are identified, pool rates can be calculated based on the total cost in each pool and the activity level for each cost driver. Finally, the costs are assigned to the products or services based on the amount of each cost driver that is associated with each product or service. Therefore, the proper sequence of events in an activity-based costing system is: Identification of cost pools, identification of cost drivers, calculation of pool rates, assignment of cost to products.

Which of the Following Is the Proper Sequence of Events