COST ACCOUNTING
ACTIVITY BASED MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The 2nd step of Simple ABC system is to assign cost of MOH activities to products
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False
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True
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Explanation:
Detailed explanation-1: -Step 2: Identify Main Activities. The next step in ABC system is to identify the main activities in the organization.
Detailed explanation-2: -The two stages of cost allocation in activity-based costing are: Allocate overhead costs to different processes or departments (called activities) in order to create cost pools. We then calculate an activity rate for each cost pool that we use in the second stage.
Detailed explanation-3: -The first stage of allocation determines the cost of each occurrence of an overhead event during the process. The second stage allocates the cost of each occurrence to individual items produced by the business.
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