Activity-based costing minimizes cost distortions because:
A) activity-based costing uses fewer cost pools.
B) activity-based costing allocates costs based on cause and effect.
C) activity-based costing uses fewer cost drivers.
D) activity-based costing only allocates product costs.

Question

Quizplus · Accepted Answer

Activity-based costing (ABC) minimizes cost distortions by allocating costs based on cause and effect, ensuring that costs are assigned more accurately to the products or services that actually consume the resources.

Activity-Based Costing Minimizes Cost Distortions Because