An activity-based costing system improves the allocation of which of the following manufacturing costs?
A) Indirect manufacturing costs
B) Direct labor
C) Direct materials
D) Sales commissions

Question

Quizplus · Accepted Answer

An activity-based costing system is designed to improve the allocation of indirect manufacturing costs. These costs, such as overhead expenses, are not easily traceable to specific products or services and may be distributed unfairly using traditional costing methods. Activity-based costing assigns these costs to specific activities or processes, which are then allocated to products based on the actual resources used.

An Activity-Based Costing System Improves the Allocation of Which of the Following