Which of the Following Is Not a Limitation of Activity-Based

question 18

Multiple Choice

Which of the following is not a limitation of activity-based costing

• A) Maintaining an activity-based costing system is more costly than maintaining a traditional direct labour-based costing system.
• B) Changing from a traditional direct labour-based costing system to an activity-based costing system changes product margins and other key performance indicators used by managers. Such changes are often resisted by managers.
• C) In practice, most managers insist on fully allocating all costs to products, customers, and other costing objects in an activity-based costing system. This results in overstated costs.
• D) More accurate product costs may result in increasing the selling prices of some products.

---

Definitions:

Reliance

Trust or dependence on something or someone, often used in legal contexts to refer to actions taken based on promises or agreements.

Respondeat Superior

A legal doctrine that holds an employer or principal legally responsible for the wrongful acts of an employee or agent, if such acts occur within the scope of the employment or agency.

Principal

In legal and business context, the principal is a party who authorizes an agent to act on their behalf for the purpose of conducting specific tasks or transactions.

Employee's Negligence

An employee’s failure to exercise reasonable care in the course of their work duties, which results in harm to another.