Activity-based costing conforms to GAAP with regard to which costs should be expensed.

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Activity-based costing (ABC) is a costing method that assigns costs to products and services based on the resources they consume. It is used for internal management purposes and does not conform to Generally Accepted Accounting Principles (GAAP) regarding which costs should be capitalized or expensed. GAAP has specific rules for expense recognition that do not necessarily align with the cost allocation methods used in ABC.

Activity-Based Costing Conforms to GAAP with Regard to Which Costs