An activity-based costing system uses which of the following procedures?
A)Overhead costs are traced to departments,then costs are traced to products.
B)Overhead costs are traced to activities,then costs are traced to products.
C)Overhead costs are traced directly to products.
D)Overhead costs are traced to the company as a whole.

Question

Quizplus · Accepted Answer

Activity-based costing (ABC) traces overhead costs to activities and then from those activities to products. This method allows for a more accurate allocation of overhead costs based on the actual activities that generate those costs.

An Activity-Based Costing System Uses Which of the Following Procedures