For activity-based cost systems, activity costs are assigned to products in the proportion of the demand they place on activity resources.

Question

Quizplus · Accepted Answer

Activity-based cost systems are designed to assign activity costs to products based on the demand they place on activity resources. This allows for the more accurate allocation of costs to products, as it takes into account not only direct costs but also indirect costs that relate to the activities required to produce the product. By assigning costs in proportion to the demand placed on activity resources, activity-based cost systems can provide better insight into the true cost of producing a product and help organizations make more informed decisions about pricing, production, and resource allocation.

For Activity-Based Cost Systems, Activity Costs Are Assigned to Products