Which of the following is a reason for using activity-based costing to allocate service department costs?
A)It results in identifying more accurate cost drivers.
B)It is required by generally accepted accounting principles.
C)It is required by the tax authorities.
D)All of the answers are correct.

Question

Quizplus · Accepted Answer

Activity-based costing helps in identifying more accurate cost drivers for service departments, as it traces costs to specific activities and resources used. This results in a more accurate allocation of costs to products or services, leading to better decision-making. The other options given are incorrect as GAAP and tax authorities do not require the use of activity-based costing for allocating service department costs.

Which of the Following Is a Reason for Using Activity-Based