Activity-based costing assigns cost to cost objects by first tracing costs to
A)products and then tracing costs to cost objects.
B)departments and then tracing costs to products.
C)activities and then tracing costs to cost objects.
D)customers and then tracing costs to products.

Question

Quizplus · Accepted Answer

Activity-based costing assigns costs to cost objects by first tracing costs to activities and then tracing costs to the cost objects. This method provides a more accurate allocation of costs as it takes into account the specific activities that are necessary to produce each product or service. Option A is incorrect as it suggests tracing costs directly to products, which is not the correct approach. Option B is incorrect as it suggests tracing costs to departments instead of activities. Option D is incorrect as it suggests tracing costs to customers instead of activities.

Activity-Based Costing Assigns Cost to Cost Objects by First Tracing