In an activity based cost system; an activity/unit of work or task with differentiated purposes will be classified as __________?
Correct answer: C. an activity
- A. different task
- B. purpose cost
- C. an activity
- D. an allocation cost
Explanation
An activity is a unit of work or task performed for a specific purpose, such as setting up a machine or inspecting a batch. The other terms are not standard ABC classifications for such work.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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