Asked by Nicole Guerrero on May 22, 2024
Verified
In activity-based costing, a product margin may exclude costs from some of the company's activity cost pools.
Product Margin
Product Margin is the difference between the selling price of a product and the costs associated with its production and sale, showcasing the profitability of specific products.
Activity Cost Pools
Groups of costs associated with particular activities, used in activity-based costing to allocate costs more precisely.
Activity-based Costing
An accounting method that assigns costs to products based on the activities performed in producing that product, providing more accurate product costing.
- Understand the impact of using ABC on product costing compared to traditional costing systems.
Verified Answer
MA
Maheswar AjaykumarMay 26, 2024
Final Answer :
True
Explanation :
Activity-based costing focuses on assigning costs to specific activities, and then assigning those costs to products based on the level of activity required to produce the product. Therefore, a product margin may exclude costs from some of the company's activity cost pools if those activities are not directly related to the production of that specific product.
Learning Objectives
- Understand the impact of using ABC on product costing compared to traditional costing systems.