The use of activity-based costing in service industries
A) has the same objective as in manufacturing.
B) results in improved costing of services provided.
C) uses cost pools to assign overhead.
D) all of these.

Question

Quizplus · Accepted Answer

Activity-based costing (ABC) has the same objective in service industries as in manufacturing, i.e., to assign costs to products or services accurately. ABC results in improved costing of services provided as it identifies the cost drivers and assigns costs to them. The method uses cost pools to assign overhead, which helps in determining the actual cost of providing a service. Therefore, all the given options are correct.

The Use of Activity-Based Costing in Service Industries