Under the ABC philosophy
A) all inventories should be reduced or eliminated.
B) the push approach should be used in the first department of a process and the pull approach should be used in all subsequent departments.
C) the cost of a product is equal to the sum of the costs of all activities performed to manufacture it.
D) only one cost driver can be used.

Question

Quizplus · Accepted Answer

The ABC philosophy stands for Activity-Based Costing philosophy. It states that the cost of a product is equal to the sum of the costs of all activities performed to manufacture it. This means that overhead costs should be allocated to products based on the activities that are required to produce them, rather than using a broad cost driver such as labor hours or machine hours. Therefore, option C is the correct answer. Options A, B, and D do not accurately reflect the ABC philosophy.

Under the ABC Philosophy