In an ABC system, flexible costs:
A) Vary with activity levels
B) Remain fixed regardless of activity levels
C) Should not be included in ABC cost pools
D) Are related to capacity

Question

Quizplus · Accepted Answer

Flexible costs, also known as variable costs, vary with activity levels. This means that as the level of activity increases, the cost of these inputs increases as well. With an ABC system, it is important to properly identify and allocate these costs to the appropriate cost pools in order to accurately calculate the cost of products or services.

In an ABC System, Flexible Costs