Question

, Which of the following statements about activity-based costing (ABC) is false? In activity-based costing, cost drivers are what cause costs to be incurred. Activity-based costing differs from traditional costing systems in that products are not cross-subsidized.

Answer 1

They are all correct.

Step-by-step explanation:

Activity-based costing (ABC) is a costing method that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each. This model assigns more indirect costs (overhead) into direct costs compared to conventional costing.

With ABC, a company can soundly estimate the cost elements of entire products, activities and services, that may help inform a company's decision to either:

Identify and eliminate those products and services that are unprofitable and lower the prices of those that are overpriced (product and service portfolio aim)

Or identify and eliminate production or service processes that are ineffective and allocate processing concepts that lead to the very same product at a better yield (process re-engineering aim)