The primary benefit of ABC is it provides
A)faster management decisions.
B)enhanced control over overhead costs.
C)more cost pools.
D)more accurate product costing.

Question

Quizplus · Accepted Answer

The primary benefit of ABC is more accurate product costing. ABC allocates indirect costs based on the activities that drive them, providing a more accurate picture of the true cost of each product or service. This information can be used to make better pricing, production, and outsourcing decisions that can ultimately improve profitability. While it may also lead to enhanced control over overhead costs and more cost pools, these are secondary benefits to the primary goal of accurate product costing. Faster management decisions may or may not result from ABC implementation depending on the complexity of the system and the organization's decision-making processes.

The Primary Benefit of ABC Is It Provides