Refining a cost system involves which of the following?
A) classifying as many costs as indirect costs as is feasible
B) creating as many cost pools as possible to capture all costs
C) identifying the activities involved in a process and understanding how those activities consume resources
D) Seeking an easier and more cost effective way to calculate average costs

Question

Quizplus · Accepted Answer

Refining a cost system involves identifying the activities involved in a process and understanding how those activities consume resources. This allows for a better understanding of the cost drivers and helps to improve the accuracy of cost allocation. Classifying costs as indirect costs and creating more cost pools may be part of the process, but they are not the main focus of refining the cost system. Seeking an easier and more cost-effective way to calculate average costs may lead to oversimplification or under-allocation of costs.

Refining a Cost System Involves Which of the Following