What Is an Advantage of Activity-Based Costing Compared to Traditional

question 40

Multiple Choice

What is an advantage of activity-based costing compared to traditional costing?

• 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:

Long-Term Debt

Borrowings and financial obligations payable over a period longer than one year.

Equity

Represents the value of an owner's interest in a property or business, calculated as the difference between assets and liabilities.

Capital Acquisitions Ratio

A measure of a company's financial ability to sustain its investment activities.

Operating Activities

Activities that relate directly to the business’s primary operations, such as selling goods and services, as opposed to investing or financing activities.