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Questions and Answers
Which of the following best describes activity-based costing (ABC)?
Which of the following best describes activity-based costing (ABC)?
- A costing method that assigns direct costs to related products and services
- A costing method that assigns indirect costs to related products and services (correct)
- A costing method that assigns costs to products arbitrarily
- A costing method that assigns overhead costs only to manufactured products
Which industry is activity-based costing (ABC) mostly used in?
Which industry is activity-based costing (ABC) mostly used in?
- Banking industry
- Manufacturing industry (correct)
- Retail industry
- Hospitality industry
What is the purpose of using activity-based costing (ABC)?
What is the purpose of using activity-based costing (ABC)?
- To get a better grasp on costs (correct)
- To assign direct costs to products
- To classify only the direct costs incurred by the company during its production process
- To assign overhead costs to products arbitrarily
