A company's management accountant is trying to improve the way costs are allocated within the company.Currently,several corporate expenses are grouped together and labeled "overhead." If the accountant wanted to use activity-based costing (ABC)to help solve the problem,what should she do?

Question

Quizplus · Accepted Answer

Activity-based costing (ABC) is a method of allocating costs that focuses on individual activities and the resources required to perform them. The accountant should map the departments' costs to their cost objects, such as products, services, or customers. The costs are then charged to the cost objects based on the activities that were required to produce or provide them. This approach provides more accurate cost information and can help the company better understand where costs are coming from and how to allocate them more effectively. A, therefore, is the best choice.

A Company's Management Accountant Is Trying to Improve the Way