Ascot Inc. has decided to adopt activitybased costing. One reason the firm's accountants decided on this approach was to:
A) provide a more meaningful way to assign indirect costs to specific products.
B) simplify the process of assigning direct costs to specific products.
C) base costing on the amount of direct labor used to produce each product.
D) move from assigning costs to activities to assigning costs to goods and services.

Question

Ascot Inc. has decided to adopt activity­based costing. One reason the firm's accountants decided on this approach was to:
A) provide a more meaningful way to assign indirect costs to specific products.
B) simplify the process of assigning direct costs to specific products.
C) base costing on the amount of direct labor used to produce each product.
D) move from assigning costs to activities to assigning costs to goods and services.

Quizplus · Accepted Answer

Activity-based costing provides a more accurate and meaningful way to assign indirect costs (such as overhead) to specific products, as it identifies the specific activities that drive those costs and assigns them accordingly.

Ascot Inc Has Decided to Adopt Activity­based Costing

Ascot Inc Has Decided to Adopt Activitybased Costing