Which of the following is a key feature of activity-based costing?
A) Overhead costs are assigned on the basis of volume.
B) Overhead costs are assigned on the basis of sales.
C) Overhead costs are assigned on the basis of direct labour hours.
D) Overhead costs are assigned on the basis of activities.

Question

Quizplus · Accepted Answer

Activity-based costing assigns overhead costs on the basis of activities rather than volume, sales, or direct labour hours. This method identifies specific activities that consume resources, and then assigns overhead costs to products and services based on the amount of resources each activity consumes. This allows for a more accurate and precise allocation of costs, as overhead costs can be traced to specific activities and then to specific products or services.

Which of the Following Is a Key Feature of Activity-Based