Activity-based cost systems
A)apply average support costs to each unit of product.
B)limit cost drivers to units of output.
C)allocate costs based on the overall level of activity.
D)generally undercost complex products.
E)highlight the different levels of activities.

Question

Quizplus · Accepted Answer

Activity-based cost systems highlight the different levels of activities and allocate costs based on those specific activities, which can provide more accurate cost information compared to traditional cost systems. Option A is incorrect since it applies average support costs indiscriminately to each unit of product. Option B is incorrect since limiting cost drivers to units of output ignores other cost drivers that may impact the cost of production. Option C is incorrect since allocation based on overall activity levels may not accurately reflect the actual cost of producing a specific product. Option D is incorrect since activity-based cost systems are designed to more accurately cost complex products.

Activity-Based Cost Systems