Which of the Following Statements Comparing Traditional and Activity-Based Costing

question 27

Multiple Choice

Which of the following statements comparing traditional and activity-based costing (ABC) is false?

• A) Traditional systems are generally less accurate than ABC systems.
• B) ABC and traditional systems often produce different product cost information.
• C) ABC systems focus on activity costing while traditional systems focus on volume costing.
• D) ABC systems are generally less expensive to implement than traditional systems.

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Definitions:

Direct Materials

Raw materials that are directly traceable to the manufacturing of a product and considered a part of the product’s cost.

Direct Labor

The labor costs directly associated with the production of goods, including wages for workers who are involved in the actual manufacturing process.

Allocation Base

A measure or statistic used to distribute indirect costs to different cost objects, such as departments or products.

Budgeted Overhead

The estimated amount of all indirect costs associated with the production process or project.