Which approach enhances the allocation of costs in an organization?

The choice of activity-based cost accounting as the correct answer highlights its effectiveness in enhancing the allocation of costs within an organization. This approach focuses on identifying the specific activities that consume resources and then assigning costs to those activities based on their actual usage. By doing so, activity-based cost accounting provides a more precise understanding of where and how costs are incurred.

This granularity allows organizations to better analyze profitability, assess product costs accurately, and make more informed strategic decisions. Through this method, businesses can identify inefficient practices and allocate resources more effectively, leading to improved operational efficiency and profitability. Unlike standard financial accounting, which may group costs broadly, or other options that lack this detailed insight, activity-based cost accounting enables a clear view of the cost drivers within an organization. This results in more strategic management of resources and improved financial planning.