Activity-based costing creates more precise matching of indirect costs with products.

Question

Quizplus · Accepted Answer

Activity-based costing (ABC) uses a more detailed analysis of the activities involved in the production process to allocate indirect costs to products, resulting in a more accurate matching of costs to products. This is in contrast to traditional costing methods, which rely on arbitrary allocation methods that may not accurately reflect the actual costs incurred by a product.

Activity-Based Costing Creates More Precise Matching of Indirect Costs with Products