Activity-based costing provides more accurate and useful cost data than traditional systems.

Question

Quizplus · Accepted Answer

Activity-based costing (ABC) allocates indirect costs to specific activities rather than using a general overhead rate. This results in a more accurate understanding of the true cost of each product or service. Traditional costing methods often apply a single overhead rate to all products or services, which can lead to distortions in cost data. Therefore, ABC is considered to provide more accurate and useful cost data than traditional systems.

Activity-Based Costing Provides More Accurate and Useful Cost Data Than