Question

true or false: in the second stage of activity based costing, the costs in the activity cost pools are allocated to products using a variety of cost drivers.

Answer 1

The statement is True. In the second stage of activity-based costing, the costs in the activity cost pools are allocated to products using a variety of cost drivers.

Examples of value drivers are direct labor hours labored, the variety of purchaser contacts made, the range of engineering change orders issued, the number of machine hours used, and the number of product returns from clients.

A cost driver simplifies the allocation of producing overhead. An appropriate allocation of manufacturing overhead is essential to determine the proper cost of a product. Inner control makes use of the price of a product to decide the fees for the goods they produce.

A hobby cost driving force refers to movements that motivate variable prices to boom or decrease for a commercial enterprise. Consequently, figuring out what product/provider is causing unique charges can assist the enterprise to grow to be extra worthwhile by higher expertise in the precise activities that are using the prices.

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