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CIMAPRO19-P02-1 Exam - Topic 7 Question 52 Discussion

Which of the following statements is TRUE about the activity based costing system when compared to absorption costing method?
C) ABC will provide more accurate overhead allocation than absorption costing
A) ABC is easier to administer than an absorption costing system
B) ABC will be less detailed than an absorption costing system
D) ABC will cost less to administer than an absorption costing system

CIMAPRO19-P02-1 Exam - Topic 7 Question 52 Discussion

Actual exam question for CIMA's CIMAPRO19-P02-1 exam
Question #: 52
Topic #: 7
[All CIMAPRO19-P02-1 Questions]

Which of the following statements is TRUE about the activity based costing system when compared to absorption costing method?

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Suggested Answer: C

by Minna at May 31, 2022, 10:51 AM

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Paris
10 months ago
Yeah, I've heard ABC can be costly to implement too.
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Grover
10 months ago
I thought ABC was more detailed, not less!
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Chu
10 months ago
Wait, isn't ABC harder to manage?
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Corinne
11 months ago
Totally agree, absorption costing can be misleading.
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Nguyet
11 months ago
ABC provides more accurate overhead allocation for sure.
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Paul
11 months ago
I’m confused about the administration costs; I thought ABC was more complex, which could mean it costs more to run than absorption costing.
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Ammie
11 months ago
I practiced a similar question, and I think the key difference is that ABC focuses on activities, so it might be more accurate overall.
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Shawnda
11 months ago
I'm not entirely sure, but I feel like ABC is actually more detailed than absorption costing, which makes me lean away from B.
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Leontine
11 months ago
I think I remember that ABC is supposed to give a more accurate overhead allocation, so maybe C is the right answer?
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Lashandra
11 months ago
Hmm, I'm a bit confused by the wording here. I'll need to think this through carefully.
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