An activity-based costing system that is designed for internal decision-making will not conform to generally accepted accounting principles because:
A)some manufacturing costs (i.e., the costs of idle capacity and organization-sustaining costs) will not be assigned to products.
B)some nonmanufacturing costs are assigned to products.
C)first-stage allocations may be based on subjective interview data.
D)all of these are reasons why an activity-based costing system that is designed for internal decision-making will not conform to generally accepted accounting principles.

Question

Quizplus · Accepted Answer

An activity-based costing system that is designed for internal decision-making will not conform to generally accepted accounting principles because it may not assign all manufacturing costs, it may assign nonmanufacturing costs, and first-stage allocations may be based on subjective interview data. Therefore, all the options listed in the question are valid reasons why an activity-based costing system that is designed for internal decision-making will not conform to generally accepted accounting principles.

An Activity-Based Costing System That Is Designed for Internal Decision-Making