Activity-based costing is a method of cost allocation that is useful for assigning _______ costs to products or services.
A) direct materials
B) direct labour
C) manufacturing overhead
D) direct materials and direct labour

Question

Quizplus · Accepted Answer

Activity-based costing is a method used for assigning indirect costs or overhead costs to products or services. Therefore, the best choice is manufacturing overhead, which includes indirect costs such as rent, utilities, and depreciation. Direct materials and direct labour are not considered indirect costs and are typically assigned using different cost allocation methods.

Activity-Based Costing Is a Method of Cost Allocation That Is