When Comparing Activity-Based Costing (ABC) with Conventional Costing Methods, Which

question 16

Multiple Choice

When comparing activity-based costing (ABC) with conventional costing methods, which of the following is the key benefit of the ABC method?

• A) It is cheaper to implement.
• B) It is based on only one or two factors, generally volume-related.
• C) It is simpler.
• D) It provides more accurate cost numbers.

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Definitions:

Unrecognized Net Loss

A loss that has occurred but has not been reported in the financial statements because it has not yet been realized through a transaction.

Projected Benefit Obligation

A measurement of the present value of future pension benefits owed to employees, based on factors like salary history and years of service.

Plan Assets

Resources set aside by a company in a dedicated fund to meet future pension benefits or other long-term employee benefits.

Vested Benefits

Employee benefits, such as pension funds or stock options, that are fully granted and cannot be forfeited even if the employment is terminated.