Activity-based costing systems should be used instead of traditional costing systems if ________.
A) indirect production costs are a large percentage of production costs
B) different products consume resources at different rates
C) only one product is produced
D) A and B

Question

Quizplus · Accepted Answer

Activity-based costing systems are better suited for situations where indirect production costs are a significant portion of production costs and different products consume resources at different rates. This is because activity-based costing provides a more accurate measure of the true cost of producing a specific product, which can help management make more informed decisions. If only one product is produced, a traditional costing system may still be appropriate.

Activity-Based Costing Systems Should Be Used Instead of Traditional Costing