Question

Which of the following product costing methods produces the most precise product costing information? Select one: A. Organization-based costing B. Activity-based costing C. Departmental overhead rate methods D. Plantwide overhead rates

Answer 1

Answer:

The correct answer is letter "B": Activity-based costing.

Explanation:

Activity-Based Costing or ABC is a type of managerial accounting that assigns certain indirect costs to the item that generates the bulk of those costs. In the industrial sector, ABC is mainly used to help measure the true cost of output per unit. Compared to other costing methods, ABC provided more clear information because it considers information about the company's activities, the quantity of those activities and their costs in the production process.