Final answer:
Activity-based costing (ABC) is more applicable in a process-costing system compared to a job-costing environment due to the standardized activities and cost drivers in the former.
Step-by-step explanation:
Activity-based costing (ABC) is a costing method that assigns costs to activities based on their consumption of resources. It then allocates those costs to products or services based on their consumption of activities. In a job-costing environment, where products are unique and produced in small quantities, it may be difficult to accurately assign costs to specific jobs or orders using ABC.
This is because the diversity of jobs can result in a wide range of activities and cost drivers, making it challenging to determine the appropriate allocation of costs.
In a process-costing system, where products are produced in large quantities and are similar or identical, ABC can be more applicable. This is because the activities and cost drivers tend to be more standardized and predictable, making it easier to allocate costs to the different processes or departments involved in the production.
For example, in a manufacturing process where multiple products are produced using the same set of processes, ABC can help in identifying the costs associated with each process and allocating them to the products based on their consumption of those processes.