Which one below is NOT an advantage of Activity Based Costing (ABC)? Group of answer choices ABC is more meaningful for costing purposes. ABC is more accurate. ABC eliminates arbitrary assignments/allocations. ABC may lead to reduced costs.
Activity-based costing: It is a method that helps in finding the activities performed by a company and it tracks the indirect costs to the activities of the company that consumes resources.
Cost driver: Cost driver is one of the measurements that help the company in tracing directly the number of units produced. It is considered as one of the casual factors, at the time of incurrence of the overhead cost. The cost driver is used as activity base while computing the overhead application rate.
Activity cost pools: A list of overhead categories that represents a cost associated with an activity that consumes overhead resources. Some of the examples for the activity cost pool are as follows machinery power cost, product inspection cost, purchasing department cost, maintenance cost.
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