A critical component of an activity-based accounting system is:
A)The ability to accurately measure activities that consume cost.
B)Few areas in the facility that capture costs.
C)The ability to eliminate non-value-added activities.
D)Flexible job-order costing information.

Question

Quizplus · Accepted Answer

An activity-based accounting system requires the ability to accurately measure activities that consume cost in order to allocate those costs to specific products or services. Without this measurement, it is difficult to determine the true cost of each product or service. The other options (B, C, and D) may be helpful in improving the efficiency or accuracy of the accounting system, but they are not critical components.

A Critical Component of an Activity-Based Accounting System Is