Which of the following is not one of the steps for applying activity-based costing in a...
Which of the following is not one of the steps for applying activity-based costing in a service business?
a.Allocate overhead costs to customers based upon activity-base usage.
b.Pay the vendor for raw materials.
c.Identify activities.
d.Determine activity rates for each activity.
Homework Answers
Activity based costing identifies the activities which cause cost to be incurred and searches for fundamental cost drivers of these activities. Once these activities and cost drivers have been indentified this information can be used to assign overhead to cost object which have actually caused cost to be incurred.
Therefore, "Pay the vendor for Raw materials" is not one of the steps for applying ABC in service business.
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