Companies are likely to benefit from activity-based costing systems if:
A) they have wide variations in the volume of individual production runs and setups are costly.
B) they have a narrow range of products with similar volumes and setups are costly.
C) they have a narrow range of products and setups are not costly.
D) None of the given answers.

Question

Quizplus · Accepted Answer

Activity-based costing systems are designed to allocate costs to individual production runs, setups, or activities. Companies with wide variations in the volume of individual production runs will benefit from ABC systems as they help to identify the true cost of each individual product. Additionally, setups are often costly, so ABC systems can help to ensure that all costs are properly allocated to each product.

Companies Are Likely to Benefit from Activity-Based Costing Systems If