ABC Is a Method of Cost Accounting Designed to Allocate

question 86

True/False

ABC is a method of cost accounting designed to allocate costs across particular business processes according to the amount of time employees devote to particular activities.

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Definitions:

T Accounts

A bookkeeping tool used to visualize and simplify the recording of transactions in debit and credit format.

Underapplied Overhead

A situation where the allocated manufacturing overhead costs are less than the actual overhead costs.

Direct Materials

Raw materials that are directly traceable to the production of specific goods or services and are significant in terms of cost.

Manufacturing Overhead

Refers to all the indirect costs associated with manufacturing, not directly tied to a specific product, such as factory rent or maintenance.