Answer the following questions using the information below:
Chess Woods Limited produces two products: wooden chess pieces and wooden inlaid chess boards. Under their traditional cost system using one cost driver (direct manufacturing labor hours), the cost of a set of wooden chess pieces is $325.00. An analysis of the activities and their costs revealed that three cost drivers would be used under a new ABC system. These cost drivers would be equipment usage, storage area for the material, and type of woods used. The new cost of a set of chess pieces was determined to be $298.00 per set.
-The goal of a properly constructed ABC system is to ________.
A) have the most accurate cost system
B) identify more indirect costs
C) develop the best cost system that meets the cost/benefit test
D) have separate allocation rates for each department

Question

Quizplus · Accepted Answer

The goal of a properly constructed Activity-Based Costing (ABC) system is to develop the best cost system that meets the cost/benefit test, ensuring that the benefits of more accurate costing justify the costs of implementing and maintaining the ABC system.

Answer the Following Questions Using the Information Below