The Main Difference Between Activity-Based Costing and Traditional Costing Systems

question 33

True/False

The main difference between activity-based costing and traditional costing systems is that activity-based
costing uses a separate allocation rate for each activity.

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Definitions:

Necessity

A requirement or indispensability; something that cannot be done without.

Midpoint Method

A technique used in economics to calculate the elasticity of demand or supply, measuring the percentage change in quantity demanded or supplied relative to a percentage change in price.

Price Elasticity

A metric determining how the quantity of a good demanded fluctuates with a shift in that good's price.

Quantity Demanded

The total amount of goods or services that consumers are willing to buy at a given price over a certain period.