Economics · Cost Accounting
A large multi-state banking conglomerate is evaluating its internal administrative costs associated with the processing of home loan applications across its branches in India. The management has observed that allocating overheads based on direct labor hours no longer provides an accurate representation of the actual resources consumed by various types of loans. They are considering a shift to a methodology that identifies specific activities in the loan processing department and assigns costs based on their actual consumption. Which of the following costing methods would be the most appropriate for this bank to ensure precise cost allocation?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Operating Costing Method
- 2Batch Costing Method
- 3Activity Based Costing Method✓
- 4Process Costing Method
Correct answer
Activity Based Costing Method
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