Homework Answers
Ans. (a) activity rates are calculated by dividing the budgeted activity cost by the total activity- base usage.
Explanation:-As compred to traditional absorption costing, ABC focuses on cost drivers. The cost drivers are activities that cause cost to increase. The traditional absorption costing focuses on volume related drivers such as lbour hours, factory overhead rates. Therefore options b and c fall under traditional absorption costing.
Hence, the correct choice is option a wherein activity rtes are calculated by dividing the budgeted activity cost by the total activity- bse usage.
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