alleryStart learning →How does ABC assign costs, rather than using broad arbitrary percentages?
ABy management guess
BBy equal shares
CBy prior year ratio
DBy cause and effect
Answer & Solution
Correct answer: D. By cause and effect
ABC links each cost to the activity that causes it, then to the products using that activity.
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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?Broad overhead percentages on common costs risk what outcome among products?