Question

ABC assumes all costs in a ________ can be grouped together because they all impact the activity.

(A) cost pool.
(B) department.
(C) time period.
(D) organization.
(E) product line.

Answer 1

The correct answer is letter "A": cost pool.

Step-by-step explanation:

Activity-Based Costing or ABC is a managerial accounting method used to assign some indirect costs to the products which incur the bulk of those costs. By doing so, it is assumed that all those costs in the cost pool can be bundled because they are relevant for production. In the manufacturing sector, ABC is mainly used to help measure the true cost of production per unit.