A control system that identifies the various activities needed to produce a product and determines the cost of those activities is referred to as
A) open-book management.
B) an economic value-added system.
C) activity-based costing.
D) an inappropriate control system.
E) none of these.

Question

Quizplus · Accepted Answer

Activity-based costing is a control system that identifies the various activities needed to produce a product and determines the cost of those activities. This system differs from traditional costing methods by focusing on the activities that drive costs rather than assuming all overhead costs are related to production volume. Open-book management and economic value-added are not related to determining the cost of activities. "Inappropriate control system" and "none of these" are too vague to be correct answers.

A Control System That Identifies the Various Activities Needed to Produce