A system that focuses on activities as the fundamental cost object and uses the costs for these activities to compile indirect costs of goods and services is
A) appraisal costs.
B) activity-based costing.
C) value engineering.
D) prevention costs.

Question

Quizplus · Accepted Answer

Activity-based costing (ABC) is a system that focuses on activities as the fundamental cost object and uses the costs for these activities to compile indirect costs of goods and services. ABC provides a more accurate way of allocating indirect costs to products and services based on their actual consumption of resources. The other options listed are quality management concepts and practices, but they do not focus on activities as a cost object.

A System That Focuses on Activities as the Fundamental Cost