Which of the following statements is true of an activity-based costing system?
A)It uses separate predetermined overhead allocation rates for each activity.
B)It is not as accurate or precise as traditional costing systems.
C)It accumulates overhead costs by processing departments.
D)It is not as complex or as costly as traditional systems.

Question

Quizplus · Accepted Answer

An activity-based costing system uses separate predetermined overhead allocation rates for each activity, unlike traditional costing systems that use a single predetermined overhead allocation rate. This makes the activity-based costing system more accurate and precise. Option B is incorrect because activity-based costing system is considered to be more accurate and precise than traditional costing systems. Option C is incorrect because an activity-based costing system accumulates overhead costs by activities, not by processing departments. Option D is incorrect because activity-based costing systems are more complex and costly than traditional costing systems.

Which of the Following Statements Is True of an Activity-Based