In an approximately relevant ABC system
A)all activities still are separated into pools; they are allocated on estimated activity levels.
B)only the most expensive activities are allocated using appropriate cause-and-effect drivers.
C)cost pools are limited to only two cost pools.
D)none of these.

Question

Quizplus · Accepted Answer

In an approximately relevant ABC system, only the most expensive activities are allocated using appropriate cause-and-effect drivers. This allows for a more accurate allocation of costs to products or services, while minimizing the efforts and resources needed to identify and measure all activities. Option A is incorrect as all activities are not separated into pools; only the most significant ones are. Option C is incorrect as limiting cost pools to only two is not a characteristic of an approximately relevant ABC system. Option D is incorrect as there is a relevant characteristic of an approximately relevant ABC system.

In an Approximately Relevant ABC System