What is an activity-based approach to designing a costing system?
a. an activity-based approach traces direct costs to a cost object by using the actual direct-cost rates times the actual quantities of the direct-cost inputs. indirect costs are allocated based on the actual indirect-cost rates times the actual quantities of the cost-allocation bases.
b. an activity-based approach describes a particular costing approach that uses broad averages for assigning the cost of resources uniformly to cost objects.
c. an activity-based approach refines a costing system by focusing on individual activities as the fundamental cost objects. it uses the cost of these activities as the basis for assigning costs to other cost objects such as products or services.
d. an activity-based approach means making changes that result in cost numbers better measuring the way different cost objects, such as products, use different amounts of resources of the company. these changes require the assignment of costs to direct and indirect cost pools and the use of a single indirect-cost rate.