A difference in GAAP-based product costing and activity-based costing is that under activity-based costing
A)all costs are classified as product and period costs whereas under GAAP they are classified by behavior.
B)sales less cost of goods sold is classified as gross profit whereas under GAAP this subtotal is titled contribution margin.
C)selling and administrative costs are allocated to products if they are incurred to provide resources that are consumed by unit-level,batch-level or product-level activities.
D)all costs are traceable whereas in GAAP-based costing all costs are not traceable.

Question

Quizplus · Accepted Answer

Under activity-based costing, selling and administrative costs are allocated to products if they are incurred to provide resources that are consumed by unit-level, batch-level, or product-level activities. This is different from GAAP-based product costing, where costs are classified based on their behavior, and not all costs may be traceable to a specific product. Additionally, under activity-based costing, the subtotal of sales less cost of goods sold is still titled gross profit, not contribution margin as stated in option B. Option A is also incorrect, as not all costs are classified as product and period costs under activity-based costing.

A Difference in GAAP-Based Product Costing and Activity-Based Costing Is