How does activity-based costing view overhead costs?
A)as the responsibility of each department.
B)as unimportant in the development of full costs.
C)as rendering service to cost units.
D)as caused by activities which 'drive' the costs.

Question

Quizplus · Accepted Answer

Activity-based costing views overhead costs as caused by activities which 'drive' the costs. This means that the overhead costs are allocated to each cost unit based on the activities that are performed to produce the product or service. This approach provides a more accurate and detailed view of the costs incurred by each cost unit, as compared to traditional costing systems which allocate overheads based on a single cost driver such as direct labor hours or machine hours.

How Does Activity-Based Costing View Overhead Costs