Compared to a traditional costing system, an activity-based costing system usually involves:
A) Fewer cost pools
B) More cost pools
C) The same number of cost pools
D) Bigger cost pools

Question

Quizplus · Accepted Answer

An activity-based costing system usually involves more cost pools compared to a traditional costing system. This is because it aims to allocate costs based on different activities that contribute to the production process, rather than just grouping them as a whole. This leads to a more accurate costing method as it assigns costs to specific activities that consume the resources.

Compared to a Traditional Costing System, an Activity-Based Costing System