Although adding more activity cost pools to an activity-based costing system may improve the accuracy of product costing, this increase in accuracy must be judged against:
A)the cost of the product.
B)the price of the product.
C)the cost of developing and maintaining the additional cost pools.
D)all of the above.

Question

Quizplus · Accepted Answer

Adding more activity cost pools may improve the accuracy of product costing, but it also involves a cost - the cost of developing and maintaining the additional cost pools. Therefore, the increase in accuracy must be evaluated against the cost of developing and maintaining the additional cost pools. The cost and price of the product are also important factors in evaluating the effectiveness of the system, but they are not the primary concern when considering whether to add more activity cost pools.

Although Adding More Activity Cost Pools to an Activity-Based Costing