In comparison with firms that use traditional costing,which of the following statements is true for firms that adopt activity-based costing (ABC)?
A)Firms using ABC only experience better cost control.
B)Firms using ABC only experience better asset utilization.
C)Firms using ABC experience better cost control and asset utilization.
D)There is no appreciable difference in cost control or asset utilization for firms using ABC.

Question

Quizplus · Accepted Answer

Firms using ABC experience better cost control and asset utilization. This is because ABC provides a more accurate and detailed view of how costs are incurred in various activities of a company. By identifying and allocating costs more accurately, ABC helps the firm to make better decisions about pricing, product mix, and resource allocation. This leads to better cost control and improved asset utilization.

In Comparison with Firms That Use Traditional Costing,which of the Following