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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