More accurate product costing information is produced by assigning costs using
A) a volume-based, plantwide rate.
B) volume-based, departmental rates.
C) activity-based pool rates.
D) all of the above.

Question

Quizplus · Accepted Answer

Activity-based costing (ABC) is the most accurate method of assigning costs because it traces the costs of activities to products based on the activities that drive the costs. This method uses activity-based pool rates, which are calculated using specific costs associated with each activity. Volume-based, plantwide rates and departmental rates do not consider the specific activities that drive costs, and therefore, often produce inaccurate product costing information.

More Accurate Product Costing Information Is Produced by Assigning Costs