When activity-based costing is used for internal decision-making, the costs of idle capacity should be assigned to products.

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Quizplus · Accepted Answer

When activity-based costing is used for internal decision-making, the costs of idle capacity should not be assigned to products since they are not directly related to producing the product but rather a result of underutilization of resources. The goal of activity-based costing is to accurately allocate costs to the activities that drive them, not to penalize products for issues outside of their control.

When Activity-Based Costing Is Used for Internal Decision-Making, the Costs