A(n) _______________ system first traces costs to activities and then to products.
A) direct costing
B) absorption costing
C) functional-based costing
D) activity-based costing

Question

Quizplus · Accepted Answer

Activity-based costing first traces costs to activities, which are then assigned to products. This method is more accurate than absorption costing or direct costing, as it considers the specific activities that drive costs and assigns those costs accordingly. Functional-based costing is another term for absorption costing, which assigns overhead costs based on a predetermined rate as a function of production volume.

A(n) _______________ System First Traces Costs to Activities and Then