Activity-based costing systems assume that:

Question

Quizplus · Accepted Answer

Activity-based costing systems allocate overhead costs based on the activities that consume them, rather than simply assigning them to products. This results in a more accurate understanding of the true cost of producing each product, as it takes into account the specific activities required for each product. option A is partially correct, as products do consume overhead costs, but this is not the primary assumption of activity-based costing systems. Option C is incorrect, as overhead costs are always significant and should be allocated appropriately. Therefore, option D is incorrect as well.

Activity-Based Costing Systems Assume That