Which of the following statements regarding service companies and activity-based costing (ABC) is true?
A) Service companies are not permitted to use ABC costing.
B) Service companies find it easier to use ABC costing than manufacturing companies.
C) Fewer repetitive activities make ABC costing more difficult to implement in service companies.
D) Service companies have proportionately less facility-level costs than manufacturing companies.

Question

Quizplus · Accepted Answer

Activity-based costing (ABC) can be more challenging to implement in service companies due to the nature of their operations, which often involve fewer repetitive activities compared to manufacturing companies. This makes it harder to identify and allocate costs based on specific activities.

Which of the Following Statements Regarding Service Companies and Activity-Based