Activity-based costing (ABC)can refine and improve cost allocations using either job-order or process cost systems.There are three significant differences between ABC and traditional cost accounting approaches.An ABC system attempts to identify anything that has a cause-and-effect relationship on costs.This cause-and-effect relationship is known as a
A)cost stimulator.
B)overhead stimulator.
C)cost driver.
D)cost catalyst.

Question

Quizplus · Accepted Answer

The cause-and-effect relationship identified by the ABC system is known as a cost driver. A cost driver is any factor that directly impacts the cost of a particular activity or process. It helps to assign costs to products or services more accurately. Options A, B, and D are not correct as they do not accurately describe the relationship between the cost and the factor influencing it.

Activity-Based Costing (ABC)can Refine and Improve Cost Allocations Using Either