In which way does activity-based costing (ABC)improve cost assignment?
A)Management is provided with true costs.
B)ABC uses a greater number of cost pools and cost drivers than traditional overhead allocation techniques.
C)ABC follows generally accepted accounting principles more closely.
D)ABC is easier to use than traditional overhead allocation techniques.

Question

Quizplus · Accepted Answer

Activity-based costing (ABC) improves cost assignment by using a greater number of cost pools and cost drivers than traditional overhead allocation techniques. This results in more accurate and precise cost allocation, providing management with better insight into the true costs of their products or services. ABC does not necessarily follow generally accepted accounting principles more closely and may be more complex and difficult to use than traditional overhead allocation techniques.

In Which Way Does Activity-Based Costing (ABC)improve Cost Assignment