APL Corporation allocates overhead to cost objects using a two-stage process. From this information, we can infer that APL:
A) Uses a traditional costing system
B) Uses an activity-based costing system
C) May be using either a traditional or an activity-based costing system
D) Is reporting its product costs accurately

Question

Quizplus · Accepted Answer

The two-stage process of allocating overhead can be a characteristic of both traditional costing systems and activity-based costing systems. In the first stage, overhead costs are collected into cost pools. In the second stage, these costs are allocated to cost objects. The method of allocation (e.g., based on direct labor hours in traditional costing or on multiple cost drivers in ABC) distinguishes the two systems, but the two-stage process itself does not specify which system is being used.

APL Corporation Allocates Overhead to Cost Objects Using a Two-Stage