Companies that use ABC allocate all costs including direct materials, direct labor and manufacturing overhead to the product based on an activity cost allocation rate.

Name: Companies that use ABC allocate all costs including direct materials, direct labor and manufacturing overhead to the product based on an activity cost allocation rate.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

ABC (Activity-Based Costing) allocates only indirect costs (overhead) based on activities, while direct materials and direct labor are traced directly to products.

Companies That Use ABC Allocate All Costs Including Direct Materials