In the activity based costing method implementation, the indirect costs are allocated by using the ___________?
Correct answer: B. One or two cost pools
- A. no cost pool
- B. One or two cost pools
- C. sustained tracing
- D. support tracing
Explanation
Activity-based costing normally uses several cost pools, each linked to an activity and its cost driver, rather than one broad overhead pool. Therefore, using one or two cost pools is the closest listed choice.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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