A company is comparing the cost of two products determined under a traditional costing system and an activity-based costing system.Let's assume the production process is very lengthy and complicated for both products.The following information is obtained: Based on these computations,what can you conclude?
A)Both costing systems provide accurate measures of cost per unit for each product.
B)Benchmarking should be used.
C)The activity-based costing system is probably more accurate than the other system.
D)The traditional costing system is probably more accurate than the other system.

Question

A company is comparing the cost of two products determined under a traditional costing system and an activity-based costing system.Let's assume the production process is very lengthy and complicated for both products.The following information is obtained:  Based on these computations,what can you conclude?
A)Both costing systems provide accurate measures of cost per unit for each product. 
B)Benchmarking should be used. 
C)The activity-based costing system is probably more accurate than the other system. 
D)The traditional costing system is probably more accurate than the other system.

Quizplus · Accepted Answer

The activity-based costing system provides more detailed information about the costs, including the activities and resources that drive those costs. This makes it more likely that the costs assigned to each product are accurate and relevant. Therefore, the activity-based costing system is probably more accurate than the traditional costing system.

A Company Is Comparing the Cost of Two Products Determined