Activity-based costing is a two-stage overhead cost allocation system that identifies activity cost pools and cost drivers. can be used only in a job order costing system. uses direct labor as its primary cost driver. is the initial phase of converting to a just-in-time operating environment.

Activity-based costing is a two-stage overhead cost allocation system that identifies activity cost pools and cost drivers.

Explanation:

Generally, an acitivity-based costing system is one of the costing method in which the different costs that are indirect such as salaries cost or utilities cost and other overhead costs are allocated and assigned to the particular product or service. This method recognizes the multifarious acitivities within the organization and alloactes the cost expense to such activities in according to the real consumption by such products.

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