The following statements have been made about traditional absorption costing and activity based costing. (1) Traditional absorption costing may be used to set prices for products, but activity based costing may not. (2) Traditional absorption costing tends to allocate too many overhead costs to low-volume products and not enough overheads to high-volume products. (3) Implementing ABC is expensive and time consuming Which of the above statements is/are true?
A、1 only
B、2 only
C、3 only
D、1 and 2 only
A、1 only
B、2 only
C、3 only
D、1 and 2 only
【参考答案及解析】
ABC can be used for cost-plus pricing. Traditional absorption costing tends to allocate insufficient overhead costs to low-volume products that use up a disproportionate amount of time for order handling, production runs and set-ups. ABC is expensive and time consuming to implement. It is therefore important to assess whether the benefits will outweigh the costs before implementing ABC.
ABC can be used for cost-plus pricing. Traditional absorption costing tends to allocate insufficient overhead costs to low-volume products that use up a disproportionate amount of time for order handling, production runs and set-ups. ABC is expensive and time consuming to implement. It is therefore important to assess whether the benefits will outweigh the costs before implementing ABC.