Which of the following is a key feature of activity-based costing?
A) Overhead costs are assigned on the basis of volume.
B) Overhead costs are assigned on the basis of sales.
C) Overhead costs are assigned on the basis of direct labor hours.
D) Overhead costs are assigned on the basis of activities.

Question

Quizplus · Accepted Answer

Activity-based costing assigns overhead costs based on activities, such as machine setups or production runs, that drive the use of resources rather than just volume or direct labor hours. This method provides a more accurate picture of the true cost of producing a product or providing a service.

Which of the Following Is a Key Feature of Activity-Based