Which of the following statements is true of activity-based costing?
A)It determines the direct cost per unit of production.
B)It is more complex than the direct labor method.
C)It involves a three-stage process.
D)It assigns costs based on the "one size fits all" rule.

Question

Quizplus · Accepted Answer

Activity-based costing is generally more complex than the direct labor method because it assigns indirect costs to products based on the activities that consume those resources, rather than relying solely on direct labor as a cost driver. The other options are incorrect. A is describing a different method called direct costing. C may be referring to the three stages of activity analysis, activity identification, cost assignment, and activity analysis reporting, but this is not specific to activity-based costing. D is incorrect because activity-based costing does not use a "one size fits all" approach; rather, it seeks to allocate costs based on the specific activities that consume them.

Which of the Following Statements Is True of Activity-Based Costing