With activity-based costing,the goal is to
A)develop a product cost that captures the amount of each resource consumed by the activities performed to produce a specific product.
B)develop a product cost that allocates manufacturing overhead to each resource consumed by the activities performed to a group of similar products.
C)develop a product cost that eliminates all waste such as machine down time and defective products.
D)develop a product cost by revenue allocations.

Question

Quizplus · Accepted Answer

With activity-based costing, the goal is to determine the cost of a product by identifying the specific activities required to produce it and then assigning the cost of each activity to the product based on the resources it consumes. This approach more accurately reflects the true cost of production and helps identify areas where efficiency improvements may be made. Option B is incorrect as it refers to allocating manufacturing overheads to groups of similar products instead of specific products. Option C is incorrect as it refers to waste elimination, which is not the primary goal of activity-based costing. Option D is incorrect as it mentions revenue allocation, which is not part of activity-based costing.

With Activity-Based Costing,the Goal Is to