Activity-based costing
A) is often used in companies with highly automated processes.
B) accumulates and classifies overhead costs based on the underlying cost behavior.
C) is often used by companies producing heterogeneous products in large quantities.
D) indicates that low-volume, specialty items are usually more costly than high-volume, easy to produce items.
E) all of the above

Question

Quizplus · Accepted Answer

Activity-based costing (ABC) is a method that accumulates and classifies overhead costs based on the activities that drive costs, rather than distributing them uniformly across products. It is particularly useful in environments with highly automated processes, for companies producing heterogeneous (diverse) products, and it highlights that low-volume, specialty items often cost more to produce than high-volume, simpler items.

Activity-Based Costing