All of the Following Describe an ABC System Except

question 105

Multiple Choice

All of the following describe an ABC system except

• A)ABC systems may only be used by service companies.
• B)ABC systems can create more accurate product costs.
• C)ABC systems are more complex and costly than traditional costing systems.
• D)ABC systems are used in both manufacturing and nonmanufacturing companies.

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Definitions:

Activity-based Costing

A cost allocation technique that assigns overhead and indirect costs to relevant products and services based on the activities they demand.

Machining

The process of shaping, cutting, or altering a material using machines or tools, often used in the manufacturing of parts or components.

Activity-based Costing

Activity-based costing (ABC) is a method of assigning overhead and indirect costs to specific products or activities based on their usage.

Machining

The process of cutting, shaping, or removing material from a workpiece using machines or tools, often for manufacturing purposes.