Activity-based costing:
A)Uses a plant-wide overhead rate to assign overhead
B)Is not expensive to implement
C)Typically applies overhead costs using direct labor-hours
D)Uses multiple activity rates

Question

Quizplus · Accepted Answer

Activity-based costing (ABC) uses multiple activity rates to more accurately assign overhead costs to products or services based on the specific activities that each requires. This contrasts with traditional costing methods that might use a single plant-wide overhead rate or direct labor-hours as the basis for overhead allocation. ABC recognizes that different products consume different resources and activities, and thus, it aims to assign costs more precisely based on those consumptions.

Activity-Based Costing