If Kelly and Logan switched from its current accounting method to an activity-based costing system,the amount of administrative cost chargeable to consulting services would:
A)decrease by $23,500.
B)increase by $23,500.
C)decrease by $32,500.
D)change by an amount other than those listed above.
E)change,but the amount cannot be determined based on the information presented.

Question

Quizplus · Accepted Answer

Under activity-based costing, administrative costs are allocated to activities based on their consumption of those activities. Consulting services would likely consume more of the administrative activities than under the current accounting method, resulting in a higher allocation of administrative costs to consulting services.

If Kelly and Logan Switched from Its Current Accounting Method