Which of the following statements is true concerning activity-based costing (ABC)?
A)ABC can distort product costs.
B)ABC fails to recognize that the demand for overhead activities is driven by product-sustaining activities.
C)ABC permits management to focus on the increased efficiencies and better resource utilization.
D)ABC first assigns costs to products,then to cost pools.

Question

Quizplus · Accepted Answer

ABC permits management to focus on the increased efficiencies and better resource utilization. By identifying which activities contribute most to the overall costs of a product or service, managers can make more informed decisions about how to allocate resources and improve efficiency. A and B are false statements, as ABC does not distort product costs but rather provides more accurate cost information, and ABC recognizes that the demand for overhead activities is driven by product-sustaining activities. D is also false, as ABC first assigns costs to cost pools, then to products.

Which of the Following Statements Is True Concerning Activity-Based Costing