Asked by Shahd Ajlani on Jun 23, 2024
Verified
In activity-based costing, each major activity has its own overhead cost pool, its own activity measure, and its own overhead rate.
Overhead Cost Pool
A collection of indirect costs that are grouped together to aid in their allocation to cost objects.
Activity Measure
A metric used to quantify the level of activity, work, or output in a business process or operation.
Overhead Rate
A financial ratio that allocates overhead costs to products or services based on a predetermined measure, often used to calculate total production costs.
- Comprehend the methodology and difficulties associated with developing an activity-based costing system.
- Recognize the significance of separating activities into different levels for accurate costing.
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Learning Objectives
- Comprehend the methodology and difficulties associated with developing an activity-based costing system.
- Recognize the significance of separating activities into different levels for accurate costing.
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