alleryStart learning →Which method is often thought more suitable than traditional absorption costing for services?
AActivity-based costing
BContract costing
COperating costing
DMarginal costing
Answer & Solution
Correct answer: A. Activity-based costing
ABC traces indirect costs through activities, which suits service firms with high overheads.
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Related questions
In the CIMA description of ABC, activities are assigned to what?In which journal did Cooper and Kaplan publish ABC articles from 1988?Drucker said ABC also records the cost of what?What limits the use of ABC, especially in services?What is a danger of ABC, like other cost allocation approaches?The chief executive's salary stays unassigned in ABC. What are such costs termed?Why did indirect costs rise relative to direct costs in modern factories?How does ABC assign costs, rather than using broad arbitrary percentages?