In activity-based costing, some manufacturing costs can be excluded from product costs.

Question

Quizplus · Accepted Answer

Activity-based costing allows for the exclusion of some manufacturing costs, such as those related to idle capacity or general factory overhead, that cannot be directly traced to individual products or production batches. By identifying and separating these costs from product costs, ABC can provide a more accurate picture of the true costs and profitability of products or customer segments.

In Activity-Based Costing, Some Manufacturing Costs Can Be Excluded from Product