One of the primary purposes of an activity-based costing system is to ________.
A) focus on quality improvements in the production process
B) focus on cost reduction in the production process
C) eliminate all overhead costs for manufactured products
D) increase the accuracy of product costs so managers can make better decisions

Question

Quizplus · Accepted Answer

The primary purpose of an activity-based costing system is to increase the accuracy of product costs, which helps managers make better decisions. This is done by identifying and assigning costs to specific activities involved in the production process, which results in more accurate cost calculations compared to traditional costing methods. While quality improvements and cost reduction may result from using activity-based costing, they are not the primary purposes of the system. The system also does not eliminate all overhead costs for manufactured products.

One of the Primary Purposes of an Activity-Based Costing System