Activity-based costing might have a role in process costing settings under what conditions?
A) under no conditions
B) when there are products produced with homogeneous processes and little diversity
C) when multiple products are being produced.
D) when only one product is being produced

Question

Quizplus · Accepted Answer

Activity-based costing may be helpful in process costing settings when multiple products are being produced because it allows for a more accurate assignment of indirect costs across the different products based on the activities they require. It can help to identify the activities that contribute to the production costs of each product, which can then be used to allocate costs more accurately. In contrast, if there is only one product being produced, traditional process costing methods may be sufficient for assigning costs to that product. Option A is incorrect because it suggests that activity-based costing has no role in process costing settings, which is not true. Option B is incorrect because homogeneous processes and little diversity may still make it difficult to accurately assign costs without taking into account the activities required for each product. Option D may also be incorrect because even if only one product is being produced, activity-based costing may be beneficial if that product requires a variety of different activities that contribute to its production cost.

Activity-Based Costing Might Have a Role in Process Costing Settings