Q9RQ - Horngren'S Financial And Managerial Accounting

Question

Question: Why is ABC usually considered more accurate than traditional costing methods?

Step-by-Step Solution

Answer

Answer

ABC considers the resources (activities) each product uses.

Step 1: Meaning of ABC

ABC is segmenting overhead usage by-products and corporations, including finance and utilities. Backhanded cost allocation is easier with activity-based costing than with traditional costing.

Step 2: Explaining why ABC is usually considered more accurate than traditional costing methods

Since ABC considers the assets (exercises), each item is ordinarily thought to be more exact than standard costing methods.

ABC is partitioning overhead for merchandise and corporation such as finance and utilities. Activity-based costing makes allocating backhanded costs simpler than the old costing approach.