Activity-based costing
A)is an accounting system that assigns a company's expenses to whichever activity in a company's value chain is responsible for creating the cost.
B)involves using benchmarking techniques to develop cost estimates for the value chain activities of each major rival.
C)is a powerful tool for identifying the different pieces of a company's value chain and classifying them as primary activities and support activities.
D)involves determining which value chain activities represent variable costs and which represent fixed costs.
E)is a tool for identifying the activities that cause a company's product to be strongly differentiated from the products of rivals.

Question

Quizplus · Accepted Answer

Activity-based costing assigns company expenses to specific activities in a value chain, allowing for a more accurate understanding of where costs are generated. It does not involve benchmarking competitors or identifying differentiation in products. It is also not concerned with variable or fixed costs, but rather with understanding the activities that generate costs.

Activity-Based Costing