Activity-Based Cost Management - Environmental Costs

Activity based management evaluates the profitability of business operations by using activity based costing. This involves identifying activities in the production process and assigning overhead costs to them. Costs directly incurred by a job are assigned to it, while overhead costs are allocated based on activity drivers. Environmental costs can be part of overhead or direct activity drivers, and are allocated accordingly. This approach helps in efficient cost management and production processes.

In what ways can environmental costs be assigned in activity based management?

Explain how overhead costs related to environmental concerns are allocated.