The cost of unused capacity can be determined using ABC costing for the purpose of:
A)Determining more accurately the ABC costs.
B)Helping managers plan the short and longer-term use of the operating resources.
C)Determining product profitability.
D)Completing an effective activity analysis.

Question

Quizplus · Accepted Answer

The cost of unused capacity can be incorporated as a separate cost category in ABC costing. This information can be helpful for managers to plan the short and long-term use of operating resources. It can also aid in determining the optimal level of capacity utilization to avoid incurring unnecessary costs. The other options are not directly related to the cost of unused capacity.

The Cost of Unused Capacity Can Be Determined Using ABC