Using activity-based cost drivers provide additional and detailed information that improves decision making compared with budgeting solely on output-based cost drivers.

Question

Quizplus · Accepted Answer

Activity-based cost drivers help to better understand the costs of various activities and how they contribute to the overall cost of producing a product or service. This information can assist in making more informed decisions about pricing, product mix, and resource allocation. Output-based cost drivers, on the other hand, only focus on the quantity of output produced and may not provide as detailed information about the various costs involved.

Using Activity-Based Cost Drivers Provide Additional and Detailed Information That