Which of the following statements about activity-based costing (ABC)is not true? (CIA adapted)
A) In ABC,cost drivers cause costs to be linked to products.
B) ABC is useful for assigning marketing and distribution costs.
C) ABC differs from traditional costing systems in that products are not cross-subsidized.
D) ABC is more likely to result in major differences from traditional costing systems if the firm manufactures only one product rather than multiple products.

Question

Quizplus · Accepted Answer

ABC is more likely to result in major differences from traditional costing systems when a firm manufactures multiple products, not just one, because it allocates overhead more accurately based on activities.

Which of the Following Statements About Activity-Based Costing (ABC)is Not