Which of the following is true of activity-based costing?
A) Overhead is allocated using direct labour hours.
B) Record keeping is less than under functional-based costing.
C) Overhead is allocated using only activity measures.
D) Overhead may be allocated using activity and volume-based measures.

Question

Quizplus · Accepted Answer

Activity-based costing (ABC) allocates overhead using activity measures, but it may also use volume-based measures to allocate overhead to products or services. This is because certain activities may consume more resources regardless of the volume of production or service provided, while other activities may vary with the volume of production or service provided. ABC is more complex than functional-based costing and requires more detailed record keeping.

Which of the Following Is True of Activity-Based Costing