The Seven Steps of Activity-Based Costing


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Why is Activity-Based Costing preferred by companies over traditional costing methods?

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1. Which of the following is NOT one of the seven steps of Activity-Based Costing?

2. Direct costs include which of the following?

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About This Quiz & Worksheet

Activity-based costing replaced the traditional costing method in manufacturing. Check your knowledge of the steps in activity based costing, its components, and use with these assessments.

Quiz & Worksheet Goals

You will be tested on:

  • The seven steps of activity-based costing
  • Indirect cost in manufacturing a product
  • Why activity-based costing is preferred

Skills Practiced

  • Information recall - access the knowledge you've gained regarding the components of direct costs
  • Reading comprehension - ensure that you draw the most important information from the lesson on activity-based costing
  • Making connections - use understanding of the calculations necessary to determine direct costs and total cost per unit

Additional Learning

Review the lesson titled The Seven Steps of Activity-Based Costing to learn about this method of product cost calculation. The objectives covered include:

  • Know how to accurately organize the steps of activity-based costing (ABC)
  • Understand the benefits of using ABC
  • Review cost-allocation base