Activity-based costing (ABC):
A) should not be applied to non-manufacturing activities.
B) should not be applied to service companies.
C) can be applied to administrative activities.
D) can only be used by manufacturing companies.

Question

Quizplus · Accepted Answer

ABC can be applied to administrative activities as well as manufacturing activities. It is a costing method that identifies the activities that consume resources and assigns costs to those activities based on their consumption of resources, rather than simply allocating costs based on broad factors like direct labor hours or machine hours. This makes it useful for any company looking to better understand the costs associated with their activities and processes.

Activity-Based Costing (ABC)