The activity-based costing system
A)is more appropriate method of cost accounting for rigid hierarchical organizations.
B)effectively departmentalizes an organization based on its core functions such as human resources, purchasing, and maintenance.
C)provides a more accurate picture of how costs should be charged to products and services.
D)assumes that organizations are bureaucratic "machines" that can be separated into component functions.
E)fails to allocate costs across business processes and is less effective than traditional methods of cost accounting.

Question

Quizplus · Accepted Answer

Activity-based costing (ABC) is a method of cost accounting designed to identify streams of activity and then to allocate costs across particular business processes according to the amount of time employees devote to particular activities. ABC can highlight where wasted activities are occurring or whether activities cost too much relative to the benefits provided. It provides a more accurate picture of how costs should be charged to products and services.

The Activity-Based Costing System