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 (ABC) is useful in situations where overhead costs constitute a significant portion of total costs. It allows for the identification and allocation of overhead costs to specific activities, which can provide more accurate cost information and better decision-making. The other options do not necessarily require a switch to ABC.

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