Regarding activity-based costing systems, which of the following statements is true?
A)ABC systems accumulate overhead costs by departments.
B)ABC costing systems are less complex and, therefore, less costly than traditional systems.
C)ABC costing systems have separate indirect cost allocation rates for each activity.
D)ABC costing systems can be used in manufacturing firms only.

Question

Quizplus · Accepted Answer

ABC costing systems have separate indirect cost allocation rates for each activity, allowing for a more accurate allocation of costs to products or services. The other statements are incorrect: ABC systems do not accumulate overhead costs by departments (they focus on activities instead), they are more complex and expensive than traditional systems, and they can be used in many different types of businesses, not just manufacturing firms.

Regarding Activity-Based Costing Systems, Which of the Following Statements Is