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Which of the following is false about activity-based costing? Select one: a. It may assign nonmanufacturing...

Which of the following is false about activity-based costing? Select one: a. It may assign nonmanufacturing costs to products. b. It uses more cost pools. c. It can be used for external financial reporting. d. It does not assign all manufacturing costs to products.
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Answer #1

Activity-based costing is not used for external reporting because:

a) external reports are less detailed than internal reports.
c) ABC does not comply with GAAP.
d) it is difficult to make changes in the existing accounting system.

Hence, the statement, "It can be used for external financial reporting." is false about activity-based costing.

Option (c) is correct as it cannot be used for external financial reporting because of the above reasons.

Option (a) is incorrect. Overheads includes both manufacturing and non manufacturing costs under activity based costing.

Option (b) is incorrect. Activity-based costing uses more cost pools than traditional costing.

Option (d) is incorrect. The statement. "It does not assign all manufacturing costs to products" is true.

Please up vote. Thanks!

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