A Traditional Costing System Employs Multiple Allocation Rates, but an Activity-Based

question 36

True/False

A traditional costing system employs multiple allocation rates, but an activity-based costing system uses only one single allocation rate.

---

Definitions:

Payback Period

The period of time needed to recover the initial cost of an investment.

Simple Rate

A basic or straightforward percentage or interest rate, not compounded or adjusted.

Purchasing

The process of acquiring goods or services to accomplish the goals of an organization, often involving activities such as selection, negotiation, and order placement.

New System

A newly implemented set of procedures, technologies, or methodologies designed to change or improve current operational processes.