Which of the following statements are true regarding Activity-Based Costing?
A) Non-manufacturing costs are not important to include when calculating the profitability of each product.
B) Transitioning from traditional costing methods to Activity-Based Costing is a relatively simple process that most companies complete quickly.
C) Costs are allocated based on a pre-determined overhead rate for each cost pool.
D) Activity-Based Costing results in a different amount of total overhead applied than under traditional costing methods.
E) None of the above

Question

Quizplus · Accepted Answer

Activity-Based Costing (ABC) allocates costs to products based on the activities required to produce each product, using a pre-determined overhead rate for each cost pool. This method is more accurate in assigning costs based on actual activities, unlike traditional costing methods that may allocate costs less precisely.

Which of the Following Statements Are True Regarding Activity-Based Costing