One Difference Between a Traditional Costing System and an ABC

question 78

Multiple Choice

One difference between a traditional costing system and an ABC system is:

• A) An ABC system allocates overhead to units of goods or services
• B) An ABC system has more cost pools and more cost drivers
• C) An ABC system traces direct materials to units and considers them to vary with volume
• D) Information from an ABC system can be used for GAAP

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Definitions:

Sole Proprietorship

An enterprise that a single person owns and runs, where there's no legal separation between the proprietor and the enterprise itself.

Limited Liability Company

A business structure that combines the pass-through taxation of a partnership or sole proprietorship with the limited liability of a corporation.

Corporation

A legal entity that is separate and distinct from its owners, offering limited liability to its shareholders, and is capable of owning property, being liable, and suing or being sued.

General Partnership

A business arrangement where two or more individuals share ownership and the responsibility for managing the business and its debts.