One of the important differences between traditional and activity-based costing systems is _____.
A)the types of costs allocated
B)the extent of allocation
C)the accuracy of the costs
D)all of these answers are correct

Question

Quizplus · Accepted Answer

Traditional costing systems allocate costs based on a single cost driver, such as direct labor hours or machine hours, while activity-based costing systems allocate costs to multiple cost pools and use multiple cost drivers to allocate those costs. This leads to a more accurate allocation of costs and a better understanding of the true costs associated with producing a product or providing a service. Therefore, all of the given options are correct in differentiating traditional and activity-based costing systems.

One of the Important Differences Between Traditional and Activity-Based Costing