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

Question

Quizplus · Accepted Answer

Activity-based costing (ABC) assigns costs to cost objects by tracing costs to activities and then allocating those costs to the cost objects based on the level of activity used by the cost object. This method recognizes that not all products or services consume resources in the same way, so it is necessary to identify the activities that consume resources and then assign those costs to the cost objects that use those activities. Therefore, option C is the correct answer.

Activity-Based Costing Assigns Costs to Cost Object by First