Which of the following is not an argument for using a separate stand alone system for activity based costing, i.e., rather than integrating ABC with the general ledger system used for GAAP?
A)GAAP product costs may be incorrect relative to ABC product costs
B)It is faster to develop.
C)It is less costly to develop.
D)Subjective information can be used that auditors might question.

Question

Quizplus · Accepted Answer

GAAP product costs and ABC product costs serve different purposes. GAAP costs are designed for external reporting and may not accurately reflect the actual costs of activities and resources used by products, which is what ABC aims to do. Thus, the argument that GAAP product costs may be incorrect relative to ABC product costs does not support the use of a separate stand-alone system for ABC; rather, it highlights a fundamental difference in the purpose and methodology of the two costing systems.

Which of the Following Is Not an Argument for Using