The following four steps are necessary in order to use an activity-based costing system:
1)Calculate the allocation rate for each activity.
2)Identify activities and estimate their total costs.
3)Identify the cost driver for each activity and then estimate the quantity of each driver's allocation base.
4)Allocate the indirect costs to the cost object.
In what order are these steps performed?

Question

Quizplus · Accepted Answer

The four steps should be performed in the following order:
2) Identify activities and estimate their total costs.
3) Identify the cost driver for each activity and then estimate the quantity of each driver's allocation base.
1) Calculate the allocation rate for each activity.
4) Allocate the indirect costs to the cost object.

Therefore, the correct order of steps is 2, 3, 1, 4, which corresponds to choice C.

The Following Four Steps Are Necessary in Order to Use