Which of the following statements is true of ABC systems?
A) ABC systems are time-driven cost systems.
B) ABC systems classify some direct costs as indirect costs and some indirect costs as direct costs.
C) ABC systems provide valuable information to managers beyond accurate product costs.
D) ABC systems assume all costs are variable costs.

Question

Quizplus · Accepted Answer

ABC systems provide valuable information to managers beyond accurate product costs, such as identifying activities that do not add value and reallocating resources accordingly. Options A and D are incorrect as ABC systems are not necessarily time-driven and do not assume all costs are variable. Option B is partially correct, as ABC systems may classify some indirect costs as direct costs based on the level of cost driver usage, but they do not classify direct costs as indirect costs.

Which of the Following Statements Is True of ABC Systems