In general, traditional product costing methods allocate less cost to low-volume products and more costs to high-volume products than activity-based costing (ABC).

Question

Quizplus · Accepted Answer

Traditional costing methods often allocate overhead based on volume-related measures like machine hours or labor hours, which can lead to under-costing low-volume products and over-costing high-volume products. Activity-based costing, on the other hand, assigns costs based on actual activities and resource usage, providing a more accurate allocation.

In General, Traditional Product Costing Methods Allocate Less Cost to Low-Volume