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 non-manufacturing costs are assigned to products.
C)first-stage allocations may be based on subjective interview data.
D)all of the above 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 ABC system designed for internal decision-making does not conform to generally accepted accounting principles (GAAP).Product costs computed for external reports must include all of the manufacturing costs and only manufacturing costs;but in an ABC system,product costs exclude some manufacturing costs and include some nonmanufacturing costs.It is possible to adjust the ABC data at the end of the period to conform to GAAP,but that requires more work.

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