Which of the following is a characteristic of activity-based costing?
A)It is a traditional costing method.
B)It encourages process-value analysis.
C)It always results in a lower cost assigned to goods or services.
D)It assigns shared costs to jobs.

Question

Quizplus · Accepted Answer

Activity-based costing encourages process-value analysis, which means that it emphasizes on identifying and managing activities that add value to the production or service process. It is a modern, more accurate costing method than traditional costing, which assigns costs based on volume or labor hours, and does not always result in lower costs assigned to goods or services. It also assigns indirect or shared costs to activities or cost objects, not just jobs.

Which of the Following Is a Characteristic of Activity-Based Costing