Rather than using a single allocation base such as direct labor-hours or machine-hours, in activity-based costing a company uses a number of allocation bases for assigning costs to products.

Question

Quizplus · Accepted Answer

Activity-based costing (ABC) uses multiple allocation bases, also known as cost drivers, to assign costs to products or services based on the activities involved in producing them. This approach is considered more accurate and reflective of actual costs than traditional methods that rely on a single allocation base.

Rather Than Using a Single Allocation Base Such as Direct