ABC systems differ from traditional systems in that ABC systems:
A) Trace direct costs to cost objects
B) Use multiple cost pools and cost drivers to allocate direct costs
C) Use multiple cost pools and cost drivers to allocate overhead costs
D) Assign costs only to units of product

Question

Quizplus · Accepted Answer

ABC systems use multiple cost pools and cost drivers to allocate overhead costs, which is different from traditional systems that only allocate overhead costs based on a single cost driver such as labor hours or machine hours. ABC systems provide more accurate and detailed information about the cost behavior of products, services or activities.

ABC Systems Differ from Traditional Systems in That ABC Systems