The amount of resources used in an activity-based costing (ABC)system for a specific activity is computed by multiplying the:
A) cost driver rate and the actual cost driver volume.
B) cost driver rate and the planned cost driver volume.
C) overhead rate and the actual cost driver volume.
D) overhead rate and the planned cost driver volume.

Question

Quizplus · Accepted Answer

In an activity-based costing system, the amount of resources used for a specific activity is calculated by multiplying the cost driver rate (the cost of the activity per unit of the cost driver) by the actual volume of the cost driver. This provides a more accurate reflection of the actual costs of the activity, as it takes into account the specific usage of resources rather than just applying a general overhead rate. Therefore, option A is the correct choice.

The Amount of Resources Used in an Activity-Based Costing (ABC)system