An Advantage of Activity-Based Costing Compared to Traditional Costing Is

question 45

Multiple Choice

An advantage of activity-based costing compared to traditional costing is:

• A) it is cheaper to implement.
• B) overhead allocation is objective rather than arbitrary.
• C) linking overheads to cost drivers results in a fairer and more accurate costing.
• D) all of the above are advantages.

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Definitions:

Equitable Assignment

The transfer of rights or benefits from one party to another, recognized by equity and intended to be binding, often used in absence of formal legal assignment.

Novation

A legal process where a new contract replaces an existing one, transferring rights and obligations from the original party to a new one.

Heavy-duty Equipment

Machines or vehicles that are designed for executing complex tasks or operations, often in construction or industrial settings, capable of handling a high level of demand or strain.

Misrepresentation

A false statement or misleading omission made by one party that induces another to enter into a contract.