For which one of the following reasons is the calculation of overhead variances in conjunction with an activity-based cost (ABC) system desirable from the standpoint of management?
A) The resulting cost-management system is currently required by generally accepted accounting principles (GAAP).
B) Such a system would be consistent with the goal of managing activities rather than cost.
C) Such a system is likely to be less costly to design and implement.
D) Far fewer variances would likely be expected under such a system.
E) Conventional systems, though appropriate for a manufacturing setting, are not applicable to the service sector.

Question

Quizplus · Accepted Answer

Activity-based cost (ABC) systems are designed to focus on managing activities instead of just focusing on costs. By calculating overhead variances in conjunction with an ABC system, managers can better understand the costs associated with different activities and determine areas for improvement or cost reduction. This approach aligns with the goal of managing activities rather than cost.

For Which One of the Following Reasons Is the Calculation