A difference in GAAP-based product costing and activity-based costing is that under activity-based costing
A)all costs are classified as product and period costs, whereas under GAAP they are classified by behavior.
B)sales less cost of goods sold is classified as gross profit, whereas under GAAP this subtotal is titled contribution margin.
C)selling and administrative costs are allocated to products if they are incurred to provide resources that are consumed by unit-level, batch-level, or product-level activities.
D)all costs are traceable, whereas in GAAP-based costing some costs are allocated.

Question

Quizplus · Accepted Answer

Under activity-based costing, selling and administrative costs are allocated to products based on the level of resources consumed by unit-level, batch-level, or product-level activities. This is not the case under GAAP-based product costing, where costs are typically classified by behavior and some costs may be allocated. Choices A and B are not accurate statements about the differences between GAAP-based costing and activity-based costing. Choice D is also not accurate because not all costs under activity-based costing are traceable to specific products or activities.

A Difference in GAAP-Based Product Costing and Activity-Based Costing Is