Activity-based costing systems increase product costing accuracy because it focuses on the ________ between the work performed and the consumption of resources.
A)link
B)bond
C)cause-and-effect relationship
D)weak relationship

Question

Quizplus · Accepted Answer

Activity-based costing systems identify the cause-and-effect relationships between the work performed and the consumption of resources, allowing for a more accurate calculation of product costs. This is based on the principle that the resources consumed by each activity should be directly proportional to the cost incurred for that activity. By identifying the specific activities and the resources consumed by each, ABC systems can allocate costs more accurately and help managers make better decisions about pricing, product mix, and resource allocation. Therefore, the correct answer is C, cause-and-effect relationship.

Activity-Based Costing Systems Increase Product Costing Accuracy Because It Focuses