Activity-Based Costing (ABC) Is Used Most Often to Improve the Assignment

question 80

True/False

Activity-based costing (ABC) is used most often to improve the assignment of overhead costs to products.

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Definitions:

Activity-based System Accuracy

Activity-based system accuracy refers to the precision with which an activity-based costing system allocates overhead costs to products or services based on the actual activities undertaken.

Distorted Product Costs

The result of allocating overhead or other costs to products in a manner that does not accurately reflect the true resources consumed by the products.

Non-volume Factors

Elements that affect a business’s operations and cost structures that are not related to the volume of goods or services produced, such as changes in technology or regulatory environments.

Non-manufacturing Costs

Expenses not directly tied to the production process, such as selling, general, and administrative expenses.