Which of the following statements is true of ABC systems?
A) ABC systems provide less insight than traditional systems into the management of the indirect costs.
B) ABC systems are used by managers for strategic decisions rather than for inventory valuation in merchandising companies.
C) Service companies find great value from ABC because a vast majority of their cost structure is composed of direct costs.
D) ABC systems is valuable for pricing decisions but not for understanding, managing, and reducing costs in government institutions.

Question

Quizplus · Accepted Answer

ABC systems are primarily used for strategic decision-making rather than just inventory valuation. Option A is incorrect because ABC systems provide greater insight into the management of indirect costs. Option C is incorrect because service companies can have significant indirect costs as well. Option D is incorrect because ABC systems can be useful for understanding and managing costs in any organization, including government institutions.

Which of the Following Statements Is True of ABC Systems