For greater accuracy when using activity-based costing, management accountants should:

Question

Quizplus · Accepted Answer

Having a larger number of cost pools will lead to a more accurate allocation of overhead costs and a better understanding of the cost drivers of each activity. This, in turn, allows management to make more informed decisions about pricing, product mix, and process improvements. The other options - using just-in-time inventory, estimating total overhead costs, and using a plant-wide rate of allocation - may have some benefits, but they are not as directly related to improving the accuracy of activity-based costing.

For Greater Accuracy When Using Activity-Based Costing, Management Accountants Should