Which of the following statements is true of activity-based costing?
A) Activity-based costing ignores the allocation of marketing and distribution costs.
B) Activity-based costing is more likely to result in major differences from traditional costing systems if the firm manufactures only one product rather than multiple products.
C) Activity-based costing classifies some of the indirect costs as direct costs.
D) Chances of product-cost cross-subsidization are higher in activity-based costing compared to traditional costing systems.

Question

Quizplus · Accepted Answer

Activity-based costing (ABC) assigns costs to activities based on their use of resources, which can result in some indirect costs being treated as direct costs for specific activities.

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