It is easier to allocate indirect costs to the products that actually caused those costs if an ABC system is used rather than a traditional costing system.

Question

Quizplus · Accepted Answer

ABC systems allocate indirect costs based on the actual activities and resources required to produce a product, rather than just using a predetermined cost allocation rate. This allows for more accurate and specific allocation of costs to products that actually caused those costs. Traditional costing systems often rely on arbitrary allocation rates, leading to inaccurate cost information.

It Is Easier to Allocate Indirect Costs to the Products