Which one of the following statements is correct? The basic principle of Activity Based Costing is that:

Question

Quizplus · Accepted Answer

The basic principle of Activity Based Costing is that cost units should bear the cost of the activities they cause. This means that the cost of each activity is identified, and then allocated to the cost unit that causes the activity to occur. This allows for a more accurate and precise allocation of costs, as opposed to simply using direct labour hours or assuming that costs are only incurred in relation to the organization's principal activities.

Which One of the Following Statements Is Correct? the Basic