Adopting Activity-Based Costing (ABC) involves four steps. Which of the following contains the four steps in the correct order?
A) Calculate cost driver rates and assign Manufacturing Overhead (MOH) to products, identify direct costs, identify activities and cost drivers for MOH, and record MOH costs
B) Identify activities and cost drivers for MOH, identify direct costs, calculate cost driver rates and assign MOH to products, and record MOH costs
C) Identify direct costs, identify activities and cost drivers for MOH, calculate cost driver rates and assign MOH to products, and record MOH costs
D) Record MOH costs, identify direct costs, identify activities and cost drivers for MOH, and calculate cost driver rates and assign MOH to products

Question

Quizplus · Accepted Answer

The correct order of the four steps is Step 1) Identify direct costs, 2) Identify activities and cost drivers for MOH, 3) Calculate cost driver rates and assign MOH to products, and 4) Record MOH costs. Choice C is the only choice out of the four lists that presents all the correct steps in the correct order.

Adopting Activity-Based Costing (ABC) Involves Four Steps