An activity-based costing system that is designed for internal decision-making will not conform to generally accepted accounting principles because:
A)under activity-based costing the sum of all product costs does not equal the total costs of the company.
B)under activity-based costing manufacturing costs are assigned to products.
C)activity-based costing has not been approved by the United Nation's International Accounting Board.
D)activity-based costing results in less accurate costs than more traditional costing methods based on direct labor-hours or machine-hours.

Question

Quizplus · Accepted Answer

Generally accepted accounting principles require that all costs incurred by a company must be allocated to its products or services. However, under activity-based costing, some costs may be assigned to non-product-related activities, which means that the sum of all product costs may not equal the total costs of the company. This deviation from traditional accounting rules is acceptable for internal decision-making purposes, but not for external financial reporting.

An Activity-Based Costing System That Is Designed for Internal Decision-Making