Compared to a traditional two-stage cost allocation system,activity-based costing systems:
A) use fewer cost centers.
B) use more cost drivers.
C) are less expensive to maintain.
D) All of these answers are correct.

Question

Quizplus · Accepted Answer

Activity-based costing systems use more cost drivers to allocate overhead costs to products or services compared to traditional two-stage cost allocation systems. This allows for a more accurate and precise allocation of costs, as it takes into account the different activities that consume overhead resources. While this may increase the complexity and cost of the system, it ultimately provides more valuable information for management decision-making. Choice A and C are incorrect, as activity-based costing systems typically use more cost centers and can be more expensive to implement and maintain compared to traditional systems.

Compared to a Traditional Two-Stage Cost Allocation System,activity-Based Costing Systems