Question

Which of the following statements is true of an​ activity-based costing​ system?

A. It uses separate predetermined overhead allocation rates for each activity.
B. It accumulates overhead costs by processing departments.
C. It is not as accurate or precise as traditional costing systems.
D. It is not as complex or as costly as traditional systems.

Answer 1

The correct answer is A. It uses separate predetermined overhead allocation rates for each activity.

Step-by-step explanation:

he ABC cost model allocates and distributes indirect costs according to the activities carried out in the process of manufacturing the product or service, identifying the origin of the cost with the necessary activity, not only for production but also for distribution and sale; The activity is understood as the set of actions that aims to incorporate added value to the product through the manufacturing process. Complementing the definition of activity, it should be mentioned that the ABC Model is based on the fact that products and services consume activities, and these in turn are the ones that generate costs.