The greatest advantage associated with activity-based costing is that:
A) It is easy to design and implement
B) It allocates all overhead costs based on the same cost driver
C) It allows for multiple cost pools and multiple cost drivers
D) It allows for multiple cost pools but only a single cost driver

Question

Quizplus · Accepted Answer

Activity-based costing allows for multiple cost pools and multiple cost drivers, which allows for more accurate allocation of overhead costs to products or services based on the specific activities that drive those costs. This can lead to better decision-making and improved profitability. Option A is incorrect because activity-based costing can be complex to design and implement. Option B is incorrect because not all overhead costs are driven by the same cost driver. Option D is incorrect because multiple cost drivers are necessary for accuracy in cost allocation.

The Greatest Advantage Associated with Activity-Based Costing Is That