Activity-based costing is appropriate for a company that has high overhead costs that are not proportional to unit volumes of individual products.

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Quizplus · Accepted Answer

Activity-based costing is used when a company wants to allocate overhead costs to individual products or services based on the specific activities that are required to produce each one. This method is especially useful when a company has high overhead costs that are not directly related to the volume of units produced. By identifying the specific activities that contribute to overhead costs, activity-based costing can provide a more accurate picture of the true costs associated with each product or service.

Activity-Based Costing Is Appropriate for a Company That Has High