Final answer:
Activity-based costing (ABC) can have a role in process settings if multiple products are being produced. It assigns overhead costs to products based on the activities that drive those costs.
Step-by-step explanation:
Activity-based costing (ABC) can have a role in process settings if multiple products are being produced. ABC is a costing method that assigns overhead costs to products based on the activities that drive those costs. It recognizes that different products consume different amounts of resources and uses multiple activity drivers to allocate costs more accurately. As an example, an internet company with a high fixed cost for setting up a medical advice website may incur variable costs differently than a company that has lower fixed costs, such as a leaf raking or snow shoveling service.
For example, let's say a company produces two products: Product A and Product B. To determine the cost of each product, ABC considers the activities involved in the manufacturing process, such as machine setup and quality control. The company would then allocate the overhead costs based on the specific activities performed for each product.