Pinnacle Inc. has decided to switch from a traditional overhead allocation system to an ABC system. So far, the firm’s managers have decided that Pinnacle needs six different activity cost pools, including one for assembling products. When selecting a driver for this cost pool, Pinnacle’s managers should be sure to select _______ A. the activity that appears to play the greatest role in determining the firm’s product assembly costs. B. the activity that appears to play the greatest role in determining how many units the firm assembles in a given period. C. the product that appears to account for the majority of the costs in the product assembly pool. D. the product that has the highest per-unit assembly cost.
Pinnacle Inc. has decided to switch from a traditional overhead allocation system to an ABC system. So far, the firm’s managers have decided that Pinnacle needs six different activity cost pools, including one for assembling products. When selecting a driver for this cost pool, Pinnacle’s managers should be sure to select _______ A. the activity that appears to play the greatest role in determining the firm’s product assembly costs. B. the activity that appears to play the greatest role in determining how many units the firm assembles in a given period. C. the product that appears to account for the majority of the costs in the product assembly pool. D. the product that has the highest per-unit assembly cost.
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter3: Cost Behavior
Section: Chapter Questions
Problem 35P: The management of Wheeler Company has decided to develop cost formulas for its major overhead...
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Pinnacle Inc. has decided to switch from a traditional overhead allocation system to an ABC system. So far, the firm’s managers have decided that Pinnacle needs six different activity cost pools, including one for assembling products. When selecting a driver for this cost pool, Pinnacle’s managers should be sure to select _______
A. the activity that appears to play the greatest role in determining the firm’s product assembly costs.
B. the activity that appears to play the greatest role in determining how many units the firm assembles in a given period.
C. the product that appears to account for the majority of the costs in the product assembly pool.
D. the product that has the highest per-unit assembly cost.
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