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3 Indirect Costs
An approach to the costing and monitoring of activities which involves tracing resource consumption and costing final outputs.
3- Indirect Cost Activity based costing (ABC) assigns manufacturing overhead costs to products in a more logical manner than the traditional approach of simply allocating costs on the basis of machine hours. Activity based costing first assigns costs to the activities that are the real cause of the overhead. It then assigns the cost of those activities only to the products that are actually demanding the activities.
It focus on Direct Material
ABC focused on every single activity of the production. it includes all the direct material direct labor and FOH
ABC costing system is connected with Direct Materials
correct answer is the third option indirect (over head) costs
