Mathematics · Commercial Mathematics and Business Operations
Which of the following is a primary benefit of implementing an Activity-Based Costing (ABC) system over traditional volume-based costing systems?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It is highly optimized and exceptionally cost-effective primarily for single-product businesses.
- 2It completely eliminates the need for any arbitrary apportionment of indirect operational costs.
- 3It explicitly recognizes that overhead costs are not always driven solely by production volume.✓
- 4It guarantees that no under-absorption or over-absorption of fixed production overheads can occur.
Correct answer
It explicitly recognizes that overhead costs are not always driven solely by production volume.
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