Service companies, in particular, find great value from ABC because a vast majority of their cost structure is composed of ________ costs.
A) prime
B) factory
C) indirect
D) committed

Question

Quizplus · Accepted Answer

ABC is an accounting method that helps allocate indirect costs to products or services based on the activities that drive those costs. Service companies generally have a high proportion of indirect costs in their cost structure, such as administrative expenses, marketing costs, and overhead. By using ABC, service companies can more accurately assign indirect costs to their services and better understand the true cost of providing those services. Therefore, the correct answer is C) indirect costs.

Service Companies, in Particular, Find Great Value from ABC Because