U2 DB1 (3).docx - In activity-based costing the manufacturing overhead costs are allocated in more logical manner Under this method costs are first

U2 DB1 (3).docx - In activity-based costing the...

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In activity-based costing the manufacturing overhead costs are allocated in more logical manner. Under this method costs are first traced to activities and then to product. It is assumed that activities are main constituents of costs. It uses several cost pools organized by activities to allocate overhead costs into a product. In Gear manufacturing company various activities are involved to produce the final product such as purchase of raw materials, setting up machinery, assembling of product line etc. All these activities yield costs. Under ABC techniques all costs
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