Question

In the blank next to the following terms, place the letter A through D that corresponds to the best description of that term.

1. Activity
2. Activity driver
3. Cost object
4. Cost pool

A. Measurement associated with an activity.

B. A group of costs that have the same activity drivers.

C. Anything to which costs will be assigned.

D. A task that causes a cost to be incurred.

Short answer

1. Activity – D
2. Activity driver –A
3. Cost object – B
4. Cost pool – C

Step-by-step solution

Step-by-Step SolutionStep 1: Meaning of Overhead Cost

Overhead costs are the cost that is not directly linked with producing a product; rather, it is related to operating the business. Itincludes all the indirect material, indirect labor, and indirect expenses.

Matching the following terms with their appropriate meanings.

S.no.	Terms	Letter	Meaning
1	Activity	D	A task that causes a cost to be incurred
2	Activity driver	A	Measurement associated with an activity
3	Cost driver	B	A group of costs that have the same activity drivers
4	Cost pool	C	Anything to which costs will be assigned