Which of the following statements is true of costing systems?
A) Single-indirect cost pool systems always result in overcosting of products.
B) Single-indirect cost pool systems classify some direct costs as indirect costs.
C) ABC systems always result in overcosting of products.
D) ABC systems classify some indirect costs as direct costs helping to improve processes

Question

Quizplus · Accepted Answer

ABC (Activity-Based Costing) systems allocate indirect costs based on the actual activities that drive costs, rather than distributing them uniformly across products or services. This approach can lead to more accurate product costing and can help identify inefficiencies in processes, but it does not reclassify indirect costs as direct costs. The explanation clarifies the role of ABC systems in improving costing accuracy and process efficiency, correcting the misinterpretation in the original statement.

Which of the Following Statements Is True of Costing Systems