Unformatted text preview: Activity centers are cost centers composed of operating activities with similar characteristics; pooling indirect costs into activity centers reduces record-keeping costs by allowing allocations based on a common cost driver for each center. Company-wide allocation rate is based on a single measure of volume, such as direct labor-hours, and is used to allocate all overhead cost to the company’s products or other cost objects. Cost pools are many individual costs that have been accumulated into a single total for the purposes of allocation . Volume-based cost drivers are measures of volume such as labor-hours, machine hours, or quantities of materials that are highly correlated with unit-level overhead costs. They serve as bases for allocating unit-level overhead costs....
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This note was uploaded on 03/31/2011 for the course ACCT 102 taught by Professor Wang during the Spring '11 term at Adelphi.
- Spring '11