The role of activity-based costing for both cellular and independent process manufacturing is to:
A)determine the profitability of a department.
B)compute the unit fixed costs incurred by a firm.
C)assign overhead shared by processes to individual processes.
D)separate fixed and variable costs incurred by multiple processes.

Question

Quizplus · Accepted Answer

Activity-based costing assigns overhead costs to individual processes based on the specific activities that contribute to the cost, rather than using a broad, overall allocation method. This is applicable for both cellular and independent process manufacturing, as it allows for a more accurate understanding of the costs associated with each process or department, which can ultimately improve decision making and profitability. A and B are both potential applications of activity-based costing, but they are not the primary purpose for using this method in process manufacturing. D is not an accurate statement, as activity-based costing does not separate fixed and variable costs, but rather assigns costs based on specific activities or drivers.

The Role of Activity-Based Costing for Both Cellular and Independent