BookCo. Uses the activity -bases costing approach for cost allocation and product costing purposes. Printing, cutting, and binding functions make up the manufacturing process. Machinery and equipment are arranged in operating cells that produces a complete product starting with raw materials.

 BookCo. Uses the activity -bases costing approach for cost allocation and product costing purposes. Printing, cutting, and binding functions make up the manufacturing process. Machinery and equipment are arranged in operating cells that produces a complete product starting with raw materials.

Which of the following are characteristic of Book’s activity-based costing approach.

i.                 Cost drivers are used as a basis of cost allocation

ii.                Costs are accumulated by department or function for the purpose of product costing

iii.               Activities that do not add value to the product are identified and reduced to the extent possible

1)     i and ii

2)     i and iii

3)     i only

4)     ii and iii

 

Answer 

   i and iii