Activity-based costing systems enhance backflush costing accounting because of the relatively more accurate budgeted conversion cost per unit for different products.

Question

Quizplus · Accepted Answer

Activity-based costing systems provide more accurate allocation of indirect costs to different products based on their individual activities, leading to a more accurate calculation of the budgeted conversion cost per unit for each product. This enhances the accuracy of the backflush costing accounting method, which uses predetermined standards for the conversion cost per unit to determine the cost of goods sold and inventory valuation.

Activity-Based Costing Systems Enhance Backflush Costing Accounting Because of the Relatively