An activity-based cost allocation system:
A) Traces costs to products on the basis of activities performed on them.
B) Does not involve the level of detail and the number of allocations that companies make with traditional allocation methods.
C) Does not provide total unit cost data.
D) Does not provide for the allocation of any cost to products that cannot be directly traced to those products.
E) Is one form of a direct or variable costing system.

Question

Quizplus · Accepted Answer

An activity-based cost allocation system traces costs to products on the basis of activities performed on them. This system is designed to provide a more accurate allocation of costs compared to traditional methods by identifying specific activities that are required to produce each product.

An Activity-Based Cost Allocation System