Which of the following statements is true concerning how companies benefit from using an activity-based accounting system?
A)They have had few changes in activities over time and few corresponding changes have been made in the accounting system.
B)They have low overhead costs.
C)They have a narrow range of products.
D)They have wide variations in the volume of individual production runs and setups are costly (i.e. ,complex production methods).

Question

Quizplus · Accepted Answer

Activity-based accounting systems are particularly useful for companies that have wide variations in the volume of individual production runs and setups that are costly. This is because activity-based costing allocates overhead costs based on the specific activities that drive those costs, rather than just relying on a traditional overhead rate. As a result, companies can more accurately determine the true cost of producing each product or providing each service, and make more informed decisions about pricing and resource allocation. Companies with a narrow range of products or low overhead costs may not see as much benefit from using activity-based accounting.

Which of the Following Statements Is True Concerning How Companies