Question

1. Which of the following is not the benefit of ABC?
A Accurate cost allocation
B, Improved decision making
C, Better control on activity and costs
D, Reduction of prime cost​

Answer 1

Reduction of prime cost is not the benefit of the activity-based costing system.

Explanation:

• In an activity-based cost system, a unique measure of cost is applied to the products and manufacturing items.
• A more accurate system of allocating the costs to the products is exercised in the ABC system
• The cost manufacture information is provided accurately dn precisely but it is not made an open statement for the financial systems.
• The product contains other manufacturing and non-manufacturing costs.