The activity-based costing system improves the allocation of ________.
A) indirect manufacturing costs
B) direct labor
C) direct materials
D) sales commissions

Question

Quizplus · Accepted Answer

Activity-based costing system is used to allocate indirect manufacturing costs more accurately. It identifies different activities that contribute to the production process and assigns costs to each activity based on their level of consumption. This system helps in identifying the true cost of producing each product or service, thus providing better insights into pricing decisions, profitability analysis, and cost control measures. The system does not improve the allocation of direct labor, direct materials, or sales commissions.

The Activity-Based Costing System Improves the Allocation of ________