Which of the following statements about activity-based costing is true?
A) It does not affect cost control.
B) Indirect cost allocation bases are unlikely to be cost drivers.
C) It provides less information than traditional cost systems.
D) It provides similar results to traditional costing when one activity creates a substantial amount of total cost.
E) It provides similar results to traditional costing when different products use resources from different activities in different proportions.

Question

Quizplus · Accepted Answer

Activity-based costing (ABC) provides similar results to traditional costing when one activity creates a substantial amount of total cost because both methods will allocate costs similarly in such cases.

Which of the Following Statements About Activity-Based Costing Is True