Activity-based cost accounting aims at:
A) making cross-company comparisons of the costs of each value chain activity.
B) dividing all company expenses into two categories: activities whose costs are variable and activities whose costs are fixed.
C) determining the costs of each activity comprising a company's value chain by establishing expense categories for specific value chain activities and assigning costs to the activity responsible for creating the cost.
D) determining the costs of each strategic action a company initiates.
E) None of these.

Question

Quizplus · Accepted Answer

Activity-based cost accounting determines the costs of each activity comprising a company's value chain by establishing expense categories for specific value chain activities and assigning costs to the activity responsible for creating the cost. It does not aim at making cross-company comparisons of the costs of each value chain activity or dividing all company expenses into two categories. It also does not determine the costs of each strategic action a company initiates. Therefore, the best answer is C.

Activity-Based Cost Accounting Aims At