A cost that is assigned to a product using activity-based costing may or may not be a relevant cost in a decision involving that product.

Question

Quizplus · Accepted Answer

Activity-based costing assigns costs to products based on activities involved in their production. While these costs may provide a more accurate picture of the total cost of producing a product, not all of these costs may be relevant to a decision involving that product, such as whether to accept a special order or discontinue a product line. Therefore, some costs assigned through activity-based costing may not be considered relevant costs in certain decision-making scenarios.

A Cost That Is Assigned to a Product Using Activity-Based