IIA Exam IIA-CIA-Part3 Topic 12 Question 75 Discussion

Actual exam question for IIA's IIA-CIA-Part3 exam

Question #: 75
Topic #: 12

Which of the following statements is true regarding activity-based costing (ABC)?

AAn ABC costing system is similar to conventional costing systems in how it treats the allocation of manufacturing overhead.

BAn ABC costing system uses a single unit-level basis to allocate overhead costs to products.

CAn ABC costing system may be used with either a job order or a process cost accounting system.

DThe primary disadvantage of an ABC costing system is less accurate product costing.

Show Suggested Answer

Suggested Answer: C

by Sabra at Apr 14, 2024, 10:44 PM

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9 days ago

Okay, so that leaves options C and D. I think C is the right answer. ABC can be used with either job order or process costing systems.

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11 days ago

Exactly. Option B is definitely wrong then. ABC uses multiple cost drivers, not just a single one.

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12 days ago

Woo-hoo, high five! I'm feeling good about this exam now. Bring on the next question!

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13 days ago

Seriously, that's just ridiculous. Okay, I think we've got it - the answer is C. Nice work, team!

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15 days ago

Ha, less accurate product costing? What kind of answer is that? Whoever wrote this question must have a few screws loose.

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16 days ago

Yep, that makes sense. And option D is wrong - the primary advantage of ABC is more accurate product costing, not less accurate.

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