Which of the following are typical characteristics of activity-based costing (ABC) method? Select TWO that apply.

Which of the following are typical characteristics of activity-based costing (ABC) method? Select TWO that apply.
A . ABC provides the information required to take action and realise improvements
B . Limited understanding of true costs incurred
C . ABC has tended to over cost products on long runs and under cost those on short runs
D . Costs are allocated based on volume
E . Variable and all related overhead expenses are specifically assigned to a business activity

View Answer

Answer: A,E

Explanation:

Activity-based costing is an alternative approach to traditional absorption costing. The

characteristics of these two methods are illustrated in the graph below:

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