Activity-Based Costing (ABC)systems Allocate Overhead Differently Than Traditional Cost Accounting

question 37

Multiple Choice

Activity-based costing (ABC) systems allocate overhead differently than traditional cost accounting systems.The difference between an ABC and a traditional cost accounting system is that

• A) traditional systems calculate several overhead rates, one for each manufacturing activity.
• B) an ABC system uses a single allocation overhead rate.
• C) ABC systems calculate several overhead rates, one for each manufacturing activity.
• D) a traditional cost accounting system uses two overhead allocation rates: one for actual activity and one for estimates (or standards).

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Definitions:

Mixture

A substance made by combining two or more different materials without chemical bonding or other chemical changes, so that each material retains its own properties.

Pounds

A unit of weight commonly used in the United States and the British imperial system, equivalent to 0.453592 kilograms.

Consistent

In the context of systems of equations, a property indicating that the system has at least one solution.

Inconsistent

Describes a system of equations that has no solution because the equations represent parallel lines which never intersect.