With activity-based costing, the goal is to
A)develop a product cost that captures the amount of each resource consumed by the activities performed to produce a specific product.
B)develop a product cost that allocates manufacturing overhead to each resource consumed by the activities performed to a group of similar products.
C)develop a product cost that eliminates all waste such as machine down time and defective products.
D)develop a product cost that maximizes the number of units sold.

Question

Quizplus · Accepted Answer

Activity-based costing aims to accurately capture the costs of each activity that goes into producing a specific product, rather than using a blanket allocation of overhead costs to all products. This approach allows for more precise cost analysis and can help identify areas where cost reductions or process improvements can be made. Maximizing the number of units sold is not the goal of activity-based costing.

With Activity-Based Costing, the Goal Is to