Which of the following statements about activity-based costing (ABC) is not true? (CIA adapted)
A) In ABC, cost drivers are used to link costs to products.
B) ABC is useful for assigning marketing and distribution costs.
C) ABC differs from traditional costing systems in that products are not cross-subsidized.
D) ABC is more likely to result in major differences from traditional costing systems if the firm manufactures only one product rather than multiple products.

Question

Quizplus · Accepted Answer

ABC is more likely to result in major differences from traditional costing systems when a firm manufactures multiple products, not just one, due to the allocation of overhead costs based on activities rather than volume.

Which of the Following Statements About Activity-Based Costing (ABC) Is