Question

Which of the following is the correct order for allocating overhead costs using activity-based costing?

a.determine overhead costs; directly trace and distribute overhead costs to support and production activities; allocate support activity costs to production activities; apply production activity costs to products

b.determine overhead costs; directly trace and distribute overhead costs to support and production activities; apply production activity costs to products; allocate support activity costs to production activities

c.directly trace and distribute overhead costs to support and production activities; determine overhead costs; allocate support activity costs to production activities; apply production activity costs to products

d.allocate support activity costs to production activities; determine overhead costs; directly trace and distribute overhead costs to support and production activities; apply production activity costs to products

Answer 1

The correct order for allocating overhead costs using activity-based costing is:

determine overhead costs; directly trace and distribute overhead costs to support and production activities; allocate support activity costs to production activities; apply production activity costs to products

The overhead costs are determined first and traced to support and production activities.

The support activity costs are then allocated to production activities and production activity costs are applied to products.

Option A is correct