Which of the following factors would suggest a switch to activity-based costing?
A)product lines similar in volume and manufacturing complexity
B)overhead costs constitute a significant portion of total costs
C)the manufacturing process has been stable
D)production managers use data provided by the existing system

Question

Quizplus · Accepted Answer

Activity-based costing is best suited for companies where overhead costs constitute a significant portion of total costs. This is because it allows for a more accurate allocation of overhead costs to products or services based on the activities that generate those costs. Factors such as product lines similar in volume and manufacturing complexity, stable manufacturing process, and production managers using existing data do not necessarily indicate a need for a switch to activity-based costing.

Which of the Following Factors Would Suggest a Switch to Activity-Based