If a firm has implemented activity-based procedures for home office expenses, it will
A) allocate all home office expenses on the basis of sales revenues.

B) allocate all home office expenses to homogeneous cost pools.
C) allocate the costs in a pool using a predetermined rate per unit of activity.
D) both a and B

Question

If a firm has implemented activity-based procedures for home office expenses, it will
A) allocate all home office expenses on the basis of sales revenues.

B) allocate all home office expenses to homogeneous cost pools.
C) allocate the costs in a pool using a predetermined rate per unit of activity.
D) both a and B

Quizplus · Accepted Answer

Activity-based procedures for home office expenses involve identifying the specific activities that contribute to the costs and assigning the costs to cost pools based on those activities. The costs in each pool are then allocated using a predetermined rate per unit of activity. This allows for a more accurate allocation of home office expenses based on the specific activities that are driving those costs. Option A is incorrect because allocating expenses solely based on sales revenue may not accurately reflect the activities that are contributing to those expenses. Option B is also incorrect because allocating expenses to homogeneous cost pools does not necessarily take into account the specific activities driving those costs.

If a Firm Has Implemented Activity-Based Procedures for Home Office