Max Inc. has started a new system of allocating costs according to what their employees do, rather than what the company spends. For example, labor expenses are allocated to employee tasks rather than salary and benefits. This practice is referred to as:
A) cost accounting.
B) accounting auditing.
C) task accounting.
D) activity-based costing.
E) allocation costing.

Question

Quizplus · Accepted Answer

Activity-based costing 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.

Max Inc Has Started a New System of Allocating Costs According