C is corrent because an activity-based costing system allocates costs to products by determining which activities performed by the entity drive the costs. An activity-based costing approach differs from traditional costing methods which accumulate costs by department or function. Activity-based costing accumulates costs by the specific activities being performed--printing, cutting, and binding in this case. By analyzing the activities of the entity, activities which do not add value to the product can be identified and reduced or eliminated.
A is incorrect because activity based costing allocates costs based on activities using cost drivers. Activities that do not add value are eliminated or minimized.
B is incorrect because activity-based costing allocates costs based on activities using cost drivers. Activities that do not add value are eliminated or minimized.
D is incorrect because activity-based costing allocates costs based on activities using cost drivers. Activities that do not add value are eliminated or minimized.
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