A key reason for using an ABC system rather than a conventional cost system is because ABC assigns overhead costs:
A)because they are indirect costs.
B)more simply than a traditional cost system.
C)based only on transaction drivers.
D)to reflect differences required by different activities as well as customers.

Question

Quizplus · Accepted Answer

ABC assigns overhead costs based on different activities and customers, which reflect the actual cost of producing a product or service. This provides more accurate cost information compared to traditional cost systems, which typically allocate overhead costs based on a single cost driver such as direct labor hours or machine hours. ABC can help managers to make more informed decisions about pricing, product mix, and process improvements.

A Key Reason for Using an ABC System Rather Than