ABC systems differ from traditional costing systems because ABC systems use:
A) Multiple activity cost pools and cost drivers to allocate overhead costs
B) Multiple activity cost pools and cost drivers to allocate direct costs
C) More automation and information technology to allocate overhead costs
D) Less automation and information technology to allocate overhead costs

Question

Quizplus · Accepted Answer

ABC systems use multiple activity cost pools and cost drivers to allocate overhead costs, which is different from traditional costing systems that use a single predetermined overhead rate based on direct labor hours or machine hours. ABC systems allow for a more accurate allocation of overhead costs to products or services based on their actual consumption of the activities that drive those costs.

ABC Systems Differ from Traditional Costing Systems Because ABC Systems