ECONOMICS

Detailed explanation-1: -In activity-based costing, unit product costs computed for external financial reports include manufacturing overhead computed by: multiplying the activity rate for each cost pool by the corresponding amount of activity required per unit of the product.

Detailed explanation-2: -In activity-based costing unit product costs computed for external financial reports include direct materials, direct labor, and manufacturing overhead.

Detailed explanation-3: -Activity-based costing (ABC) is a method of assigning overhead and indirect costs-such as salaries and utilities-to products and services. The ABC system of cost accounting is based on activities, which are considered any event, unit of work, or task with a specific goal.

Detailed explanation-4: -Activity-based costing (ABC) is a method to determine the total cost of manufacturing a product, including overhead. It is calculated by taking the cost pool total and dividing it by the cost driver.

Detailed explanation-5: -Overhead costs are allocated to products by multiplying the predetermined overhead rate for each activity (calculated in step 4) by the level of cost driver activity used by the product. The term applied overhead is often used to describe this process. The bottom shows the overhead cost per unit for each product.