Question

Identifies activities and the cost of activities the product/job is subject to, thus computes multiple predetermined rates which are used to assign indirect costs to products/jobs based on their actual usage of base identified for each activity

-Steps:
1.) Identify activities and estimate their total cost
2.) Identify the allocation base for each activity and estimate the quantity of each allocation base
3.) Compute the predetermined MOH rate for each activity
4.) Allocate indirect costs to the product based on actual use of the cost object (activity)

Answer 1

The subject of this question is Business. It involves the process of identifying activities and determining their costs to allocate indirect costs to products or jobs based on their actual usage of a specific allocation base.

Step-by-step explanation:

The subject of this question is Business. It involves the process of identifying activities and determining their costs to allocate indirect costs to products or jobs based on their actual usage of a specific allocation base.

For example, in a manufacturing company, the activities can include machine setup, material handling, and quality control. The costs associated with these activities, such as labor, utilities, and supplies, are estimated and allocated to products or jobs based on the actual quantity of the allocation base.

By using this method, businesses can more accurately assign indirect costs, such as overhead, to their products or jobs, leading to better cost control and pricing decisions.