COST ACCOUNTING
ACTIVITY BASED MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Select all answers that are relevant to step 1 of the comprehensive ABC system
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Identify activity centres
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Assign costs to activity centres
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Identify activities and resource drivers for each activity centre
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Assign activity centre costs to activities using resource drivers
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Explanation:
Detailed explanation-1: -Step 1: Identify the products that are the chosen cost objects. Step 2: Identify the direct costs of the products Step 2: Identify the direct costs of the products.
Detailed explanation-2: -4ABC uses four different levels of activity cost driver to allocate the cost from resource to product. These cost drivers are Resource-to-Department Cost Driver, Department-to-Function Cost Driver, Function-to-Activity Cost Drivers and Activity-to-Product Cost Driver.
Detailed explanation-3: -Examples of cost drivers include machine setups, maintenance requests, consumed power, purchase orders, quality inspections, or production orders.
There is 1 question to complete.