Question2.1 If Risky Ltd used activity-based costing to allocate overhead costs, which of the above mentioned activities would you group together into a homogeneous cost pool (if any)? (1 mark) Select your answer from the dropdown box: [select: , Packing benchtops and inspecting bench tops., None of the above activities would be grouped together, Machine set-up and packing, Machine set-up, packing, and visiting construction site, Machine set-up, packing, and inspecting bench tops., Visiting construction site and machine set-up, Packing and visiting construction site]. ResetMaximum marks: 1 Flag question undefinedMultiple dropdown selections
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Question2.1 If Risky Ltd used activity-based costing to allocate overhead costs, which of the above mentioned activities would you group together into a homogeneous cost pool (if any)? (1 mark) Select your answer from the dropdown box: [select: , Packing benchtops and inspecting bench tops., None of the above activities would be grouped together, Machine set-up and packing, Machine set-up, packing, and visiting construction site, Machine set-up, packing, and inspecting bench tops., Visiting construction site and machine set-up, Packing and visiting construction site]. ResetMaximum marks: 1 Flag question undefinedMultiple dropdown selections

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BlackTom AI · Accepted Answer

Activity-based costing (ABC) groups overhead into homogeneous cost pools where the activities in each pool are driven by the same cost driver and consume resources in a similar way. Homogeneous pools improve accuracy by ensuring one resource driver explains costs for all activities in that pool.

1. Relevant knowledge points and concepts
- Homogeneous cost pool: activities that share the same type of cost behavior and are driven by the same measure (e.g., per unit, per batch, per order, per customer).
- Common activity types: unit-level (per item), batch-level (per production run), product/customer/project-level (per customer or site).

2. Step-by-step reasoning
- Identify drivers for each activity:
  - Packing benchtops: performed for each benchtop (unit-level) — driver: number of benchtops packed.
  - Inspecting benchtops: typically performed per benchtop or per finished unit (unit-level) — driver: number of benchtops inspected.
  - Machine set-up: usually done per production run/batch (batch-level) — driver: number of setups or batches.
  - Visiting construction site: done per customer/project (project-level) — driver: number of site visits or projects.
- Group activities that share the same driver/type: packing and inspecting are both unit-level and vary directly with the count of benchtops.

3. Calculations/intermediate steps
- No numerical calculations are required; the grouping is based on activity type and driver alignment.

4. Why the correct answer is correct
- Packing benchtops and inspecting benchtops form a homogeneous pool because both activities are driven by the same base (each benchtop) and their costs vary proportionally with the number of units.

5. Why other options are incorrect (brief)
- Machine set-up differs (batch-level) from packing/inspection (unit-level).
- Visiting construction site is project-level and does not vary with unit count.
- Any grouping that mixes unit-, batch-, and project-level activities would create heterogeneous pools and reduce ABC accuracy.