Activity based costing vs. step down allocation method
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What is the relationship between the concepts cost allocation basis as used in the step-down method and cost driver as used in ABC?
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Your tutorial is 201 words and gives an example to illustrate how the cost allocation basis is the same in both methods.
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The "cost allocation basis" is the activity used to spread costs to a cost object. For instance, you can use labor hours to spread overhead to jobs in a factory. Or you can use headcount to spread department costs to production. Both step-down and activity based costing use cost allocation basis as the way they spread costs to the area that is supposed to absorb the indirect costs. There is no ...
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