Activity-Based Costing is best explained by which of the following statements?
A) Ordering all costs alphabetically for easier cataloging in a database.
B) Accumulating and allocating overhead costs based on a variety of activity drivers.
C) Calculating costs sequentially by the order that they affect the production process.
D) More accurately tracking materials and labor costs for each product.

Question

Quizplus · Accepted Answer

Activity-Based Costing (ABC) focuses on accumulating and allocating overhead costs to products or services based on the activities that drive those costs, rather than using a single, broad allocation base. This approach helps in understanding the true cost of producing a product or delivering a service by identifying the relationship between costs and activities.

Activity-Based Costing Is Best Explained by Which of the Following