Which of the following statements is true?
A)Many traditional costing systems can distort product costs and profitability.
B)Traditional costing systems tend to be more costly than activity-based costing systems.
C)Activity-based costing systems tend to combine various costs into a single cost pool.
D)Activity-based costing systems tend to use fewer cost pools than does a traditional costing system.

Question

Quizplus · Accepted Answer

Traditional costing systems tend to allocate overhead costs based on a single predetermined overhead rate, which can lead to inaccuracies and distortions. Activity-based costing systems, on the other hand, allocate costs based on specific activities that drive those costs, leading to more accurate product costing and profitability analysis.

B, C, and D are all false statements. Activity-based costing systems can often be more costly to implement and maintain than traditional costing systems. Activity-based costing systems typically separate costs into multiple cost pools based on different activities, whereas traditional costing systems often just use one predetermined overhead rate.

Which of the Following Statements Is True