A company is considering the implementation of an activity-based costing and management program. The company:
A) Should focus on manufacturing activities and avoid implementation with service-type functions.
B) Would probably find a lack of software in the marketplace to assist with the related record keeping.
C) Would normally gain added insights into causes of cost.
D) Would likely use fewer cost pools than it did under more traditional accounting methods.

Question

Quizplus · Accepted Answer

Activity-based costing (ABC) provides more detailed insights into what drives costs within a company by assigning costs to specific activities related to the production of a product or service. This approach helps in understanding the true costs of products or services, leading to more informed decision-making.

A Company Is Considering the Implementation of an Activity-Based Costing