The first stage of ABC entails the assignment of a. resource costs to departments. b. activity costs to products or customers. c. resource costs to a plantwide pool. d. resource costs to distribution channels. e. resource costs to individual activities.

Question

Juliet Brock

Business

6 July, 20:50

The first stage of ABC entails the assignment of a. resource costs to departments. b. activity costs to products or customers. c. resource costs to a plantwide pool. d. resource costs to distribution channels. e. resource costs to individual activities.

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Answers (1)

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Deanna · Answer 1

The correct option is E, assigning resource costs to individual activities.

Explanation:

In Activity Based Costing system, costs are first of all assigned to individual activities consuming the costs since costs are driven by activities.

Invariably, the products or services are responsible for different activities carried out in the firm, the more dynamic and complex a product or service is, the higher the level of activities it consumes. This then accounts for the reason some items produced in small quantity might have higher costs based on higher level of activities compared to some other that are produced in large quantity but little sophistication