Which of the Following Is Not an Advantage of Activity-Based

question 102

Multiple Choice

Which of the following is not an advantage of activity-based costing?

• A) Activity-based costing is easier and less time consuming to calculate.
• B) Activity-based costing information can be used to make decisions that will lead to improved customer satisfaction and greater profits.
• C) More accurate cost information can be obtained by using activity-based costing.
• D) Activity based costing considers the resources each product actually uses, so management can better control overhead costs.

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Definitions:

Product Costs

Costs that are incurred to acquire or manufacture a product, including direct materials, labor, and overhead expenses.

Period Costs

Expenses that are not directly tied to the production of goods and are instead accounted for as expenses in the period they are incurred.

Direct Materials

The raw materials directly traced and integral to the finished product in the manufacturing process.

Work in Process

Inventory that includes goods partially through the production process but not yet complete.