Compared to a Traditional Costing System, an Activity-Based Costing System

question 22

Multiple Choice

Compared to a traditional costing system, an activity-based costing system usually involves:

• A) Fewer cost pools
• B) More cost pools
• C) The same number of cost pools
• D) Bigger cost pools

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Definitions:

Tolerance

The allowable deviation from a standard measurement in the manufacturing process, determining how much a part can vary from a specified dimension.

Locational Transition Fits

A type of fit specifying a range wherein there may be either a slight interference or clearance between parts, used for parts requiring precise alignment.

Clearance

The amount of space or distance allowed between two parts for proper fit, function, or movement.

Interference Fits

A type of fit in mechanical engineering where two parts are so tightly fit together that they deform each other to stay in place.