Which of the following procedures best describes activity-based costing? Select one: A. All overhead costs are recorded as expenses as incurred. B. Overhead costs are assigned to departments; then costs are assigned to products. C. Overhead costs are assigned directly to products. D. Overhead costs are assigned to activities; then costs are assigned to products.

Question

Business

Zander

24 October, 23:18

Which of the following procedures best describes activity-based costing? Select one: A. All overhead costs are recorded as expenses as incurred. B. Overhead costs are assigned to departments; then costs are assigned to products. C. Overhead costs are assigned directly to products. D. Overhead costs are assigned to activities; then costs are assigned to products.

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Answers (2)

Know the Answer?

Regina Murphy · Answer 1

The correct answer is C

Explanation:

ABC stands for the Activity - based costing, which is the method or the technique for assigning the indirect costs as well as overhead like utilities and salaries to the services and products.

The ABC system or the method of the accounting is grounded on the activities that are considered as event, task or work unit with a particular goal.

In this system of costing, the indirect costs involve the overhead that are assigned to the activities first and then the activity costs are assigned to the products or other objects of cost.

Diego Pearson · Answer 2

D. Overhead costs are assigned to activities; then costs are assigned to products.

Explanation:

Activity-based costing provides the most precise product costing information because unlike the other methods, it produces information about the activities, the quantities of activities, and the cost of activities that go into producing a product.

In activity based costing, indirect costs including salaries, utilities, overhead are assigned to activities; then activity costs are assigned to products or other cost objects.