Activity-based accounting systems
A) accumulate overhead costs by department.
B) can turn many indirect overhead costs into direct costs.
C) are less complex and therefore less costly than traditional systems.
D) can be used in manufacturing firms only.

Question

Quizplus · Accepted Answer

Activity-based accounting systems focus on linking indirect costs to specific activities or processes, which allows these costs to be allocated as direct costs to a particular product, service or customer. This approach shifts the focus from departmental overhead to more precise measures of costs, resulting in more accurate product costing and decision-making. It is suitable for a range of industries, including manufacturing, services and healthcare.

Activity-Based Accounting Systems