Which of the following statements is true about activity-based costing (ABC)? A) It assigns costs based solely on direct labor hours B) It allocates overhead costs based on activities that drive costs C) It simplifies the cost allocation process D) It is only used for manufacturing companies

Which of the following statements is true about activity-based costing (ABC)? A) It assigns costs based solely on direct labor hours B) It allocates overhead costs based on activities that drive costs C) It simplifies the cost allocation process D) It is only used for manufacturing companies

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter6: Activity-based, Variable, And Absorption Costing

Section: Chapter Questions

Problem 17MC: Under absorption costing, a unit of product includes which costs? A. direct material, direct labor,...

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help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working

Which of the following statements is true about
activity-based costing (ABC)?
A) It assigns costs based solely on direct labor hours
B) It allocates overhead costs based on activities that
drive costs
C) It simplifies the cost allocation process
D) It is only used for manufacturing companies

Definition Definition Structural system an enterprise uses to collect, store, report, retrieve, and process financial data. Accounting information systems are used by business analysts, auditors, accountants, and consultants for accurate and efficient access to financial data.

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A company has traditionally allocated its overhead based on machine hours but had collected this information to change to activity-based costing: A. How much overhead would be allocated to each unit under the traditional allocation method? B. How much overhead would be allocated to each unit under activity-based costing?
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