Which of the following is true about activity-based costing?

a. It should not be used with process or job costing.

b. It can be used with either process or job costing.

c. It can be used only with job costing.

d. It can be used only with process costing.

Answer: Option (b) is correct.

Activity-based costing is referred to as a method of costing that recognizes activities in a business organization and allocate the cost of the individual activity to all commodities and services in accordance with the actual consumption. This method allocates more indirect into direct costs when compared to costing done via conventional methods.