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.

---

Definitions:

Control Account

A general ledger account that summarizes the total amounts recorded in various subsidiary ledgers for easier and consolidated reporting.

Accounting System

A comprehensive process of collecting, recording, classifying, and summarizing financial information for business transactions.

Feedback

Measures provided to operational employees or managers on the performance of subunits of the organization. These measures are used by employees to adjust a process or a behavior to achieve goals. See management by exception.

Systems Analysis

The process of studying and analyzing a system to identify its goals and purposes and to create systems and procedures that will achieve them in an efficient way.