Question

Activity rates are used to apply overhead costs to products and customers in -stage allocation. (Enter only one word per blank).

Option 1:
Single

Option 2:
Multiple

Option 3:
First

Option 4:
Final

Answer 1

Activity rates are used to apply overhead costs to products and customers in multiple-stage allocation. This method allows for a more accurate allocation of overhead costs by considering the different activities that contribute to those costs.

Step-by-step explanation:

Activity rates are used to apply overhead costs to products and customers in multiple-stage allocation. In multiple-stage allocation, overhead costs are allocated to two or more cost pools, which are then allocated to products or customers based on their activity levels. This method allows for a more accurate allocation of overhead costs by considering the different activities that contribute to those costs.

For example, a company may have two cost pools for allocating overhead costs: one for production activities and another for distribution activities. The company can use activity rates to allocate the production costs based on the number of units produced, and allocate the distribution costs based on the number of products shipped. By spreading the overhead costs across different activities and then allocating them to products or customers, the company can better understand the actual cost of each product or customer.