Which cost accounting technique allocates overhead costs to products based on the specific activities required to produce them?

Explanation

• Activity-Based Costing (ABC) assigns indirect overhead costs to activities and then allocates costs to products based on activity consumption.
• ABC provides far more precise cost measurements for complex manufacturing processes compared to traditional volume-based overhead allocation.
• It identifies multiple cost drivers (e.g., setup hours, inspection counts) rather than relying solely on direct labor hours.