Final answer:
The true statement about the time-driven activity-based costing (ABC) system is that it calculates activity cost by multiplying the cost of supplied resources by the practical capacity of these resources. This method assists in cost management and estimation for better operational decisions.
Step-by-step explanation:
The time-driven activity-based costing (ABC) system is a refined method of costing that assigns costs to activities based on time rather than traditional volume-based cost drivers. The option that most accurately represents a true statement regarding time-driven ABC is option b: It computes activity cost by multiplying the cost of resources supplied by the practical capacity of resources supplied. Unlike other costing methods that might involve extensive interviews or surveys to determine cost drivers, time-driven ABC relies on estimated consumption ratios and the capacity of resources, bypassing the need for detailed resource driver determination.
Implementing a time-driven ABC system can involve understanding various cost measures such as fixed costs, marginal costs, and average costs. In a broader sense, this system can help organizations make informed decisions by using mathematical models and cost estimation techniques to predict and compare costs for different scenarios and capacities.
Furthermore, understanding how costs behave at different production levels, as described by the "tenths rule" and the shapes of the long-run average cost curves, can also provide valuable insights for firms when aligning their costing methods with production strategies. Firms need to appreciate the linkage between cost management and operational efficiency to maintain competitiveness.