Activity-based cost management (ABM)can best be defined as:
A) a cost system using multiple departmental overhead rates.
B) the use of cost information gathered using activity-based costing (ABC).
C) a quality-control system focusing on eliminating errors and mistakes.
D) an incentive system for a company's key decision-makers.

Question

Quizplus · Accepted Answer

ABM is the use of cost information gathered using activity-based costing (ABC) to improve decision-making, resource allocation, and operational efficiency. It involves analyzing the costs of activities and processes to understand their relationships with products, services, and customers. Therefore, option B is the most appropriate definition of ABM. Option A suggests a traditional overhead cost allocation method, while option C describes quality control and option D refers to incentives, which are not related to ABM.

Activity-Based Cost Management (ABM)can Best Be Defined As