In a time-driven ABC system, once the managers determine the cost of per time unit of supplying resources to activities, the next step would be
A)for managers to determine how long an employee takes to do an activity.
B)assign costs of a department's resources to the customer who uses the services.
C)for managers to determine the time it takes to carry out one unit of each kind of activity.
D)attempt to estimate practical capacity.

Question

Quizplus · Accepted Answer

Once the cost of supplying resources to activities is determined, the managers need to calculate the time it takes to carry out one unit of each activity. This step is important to accurately allocate costs to each activity based on its time consumption. Choice A is not necessary as the time taken by an employee may vary based on skill and experience, which is not relevant in a time-driven ABC system. Choice B is incorrect as the cost of a department's resources is not assigned to individual customers in a time-driven ABC system. Choice D is also not the next step as estimating practical capacity is done to calculate the cost per unit of capacity, which is not relevant at this stage.

In a Time-Driven ABC System, Once the Managers Determine the Cost