A difference in GAAP-based product costing and activity-based costing is that under activity-based costing
A)All costs are classified as product and period costs whereas under GAAP they are classified by behavior.
B)Sales less cost of goods sold is classified as gross profit whereas under GAAP this subtotal is titled contribution margin.
C)Selling and administrative costs are allocated to products if they are incurred to provide resources that are consumed by unit-level, batch-level or product-level activities.
D)All costs are traceable whereas in GAAP-based costing all costs are not traceable.

Question

Quizplus · Accepted Answer

Activity-based costing allocates selling and administrative costs to products if they are incurred to provide resources that are consumed by those products. This is a departure from GAAP-based costing, which may allocate such costs based solely on their behavior (i.e. direct vs. indirect).

A Difference in GAAP-Based Product Costing and Activity-Based Costing Is