Question

Overton Enterprises is converting to an activity-based costing system. It wishes to depict the various activities in its manufacturing process along with the activities' relationships. Which of the following is a tool that the company can use to accomplish this task?
Multiple Choice

Storyboards.

Activity relationship charts (ARCs).

Decision trees.

Simulation games.

Process organizers.

Answer 1

Answer:

The correct answer is the option B: Activity relationship charts (ARCs).

Explanation:

To begin with, ''activity-based costing system'' is the name that receives a costing method that focuses in the identification of activities and proper assignment of the them to the products and services according to the actual consumption by each. Moreover, the main purpose of this model is to assign more indirect costs into direct costs.

To continue, the ''activity relationship chart'' is a tabular that displays the closeness rating among all pairs of activities and therefore that this tool is the most suitable for the company to accomplish the task of converting into an activity-based costing system.