Which of the following is not typical of traditional costing systems?
A) Use of a single predetermined overhead rate.
B) Use of direct labor hours or direct labor cost to assign overhead.
C) Assumption of correlation between direct labor and incurrence of overhead cost.
D) Use of multiple cost drivers to allocate overhead.

Question

Quizplus · Accepted Answer

Traditional costing systems typically use a single predetermined overhead rate or direct labor hours/cost to allocate overhead. They also assume a correlation between direct labor and overhead costs. The use of multiple cost drivers to allocate overhead is a characteristic of activity-based costing (ABC) systems, which are not considered traditional costing systems.

Which of the Following Is Not Typical of Traditional Costing