Asked by Monique Duplessis on Apr 29, 2024
Verified
An activity-based costing system that is designed for internal decision-making will not conform to generally accepted accounting principles because:
A) under activity-based costing some manufacturing costs (i.e., the costs of idle capacity and organization-sustaining costs) will not be assigned to products.
B) under activity-based costing the sum of all product costs does not equal the total costs of the company.
C) activity-based costing has not been approved by the United Nation's International Accounting Board.
D) activity-based costing results in less accurate costs than more traditional costing methods based on direct labor-hours or machine-hours.
Organization-Sustaining Costs
Costs that are not directly attributable to any specific business activity, product, or service but are necessary for the overall operation of an organization.
Generally Accepted Accounting Principles
A set of accounting standards and practices that are widely accepted and used in the U.S. for financial reporting.
Activity-Based Costing
An accounting method that assigns costs to products or services based on the activities required to produce them, leading to more accurate product costing.
- Understand the limitations of ABC for external reporting and its non-conformity with generally accepted accounting principles (GAAP).
Verified Answer
Learning Objectives
- Understand the limitations of ABC for external reporting and its non-conformity with generally accepted accounting principles (GAAP).
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