ABC generally causes the least amount of cost distortion among products because indirect costs are allocated to the products based on
A)types of activities used by the product.
B)the extent to which the activities are used.
C)both A and B.
D)none of the above.

Question

Quizplus · Accepted Answer

ABC (Activity-Based Costing) allocates indirect costs to products based on the types and extent of activities used by the product, which means both A and B are correct. This method reduces cost distortion, as it assigns costs more accurately to the products that consume those costs, leading to a more precise understanding of product profitability. Therefore, choice C, i.e., both A and B, is the correct answer.

ABC Generally Causes the Least Amount of Cost Distortion Among