Which of the following is a sign that an ABC system may be useful?
A)Operations staff agrees with accountants about the costs of manufacturing and marketing products and services
B)There are small amounts of indirect costs
C)Products make diverse demands on resources because of differences in volume,process steps,batch size or complexity
D)Products a company is less suited to produce and sell show small profits

Question

Quizplus · Accepted Answer

ABC systems are useful when products have diverse demands on resources due to differences in volume, process steps, batch size, or complexity. This is because traditional costing methods tend to allocate indirect costs based on a single cost driver, such as direct labor hours, which may not accurately reflect the actual resource consumption of different products. Therefore, the use of multiple cost drivers in an ABC system can more accurately allocate indirect costs to products based on their unique characteristics. The other choices do not necessarily indicate a need for an ABC system.

Which of the Following Is a Sign That an ABC