Question

Activity-based costing allocates selling and administrative expenses a.based on sales volume in dollars. b.in accordance with GAAP. c.based on sales volume in units. d.based on how each product consumes activities.

Answer 1

Based on how each product consumes activities, activity-based costing allocates selling and administrative expenses. Hence, Option D is the correct statement.

What do you understand by Activity-based costing?

A costing technique that identifies activities in an organization and assigns the cost of every activity to all services and products in line with the real consumption via way of means of each is referred to as Activity-based costing.

This version of the costing technique assigns greater indirect costs into direct fees as compared to traditional costing.

Hence, Based on how each product consumes activities, Activity-based costing allocates selling and administrative expenses. Option D is the correct statement.

learn more about Activity-based costing:

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