Which of the Following Statements Is True of Costing Systems

question 166

Multiple Choice

Which of the following statements is true of costing systems?

• A)Many traditional costing systems can distort product costs and profitability.
• B)Traditional costing systems tend to be more costly than activity-based costing systems.
• C)Activity-based costing systems tend to combine various costs into a single cost pool.
• D)Activity-based costing systems tend to use fewer cost pools than does a traditional costing system.

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Definitions:

Externalities

Consequences of an economic activity experienced by unrelated third parties; can be positive or negative.

Market Failure

A situation where the allocation of goods and services by a free market is not efficient, often justifying government intervention.

Pollution

The contamination of the natural environment by harmful substances, leading to adverse health effects and environmental damage.

Market Failure

A situation where the allocation of goods and services by a free market is not efficient, often leading to a net societal welfare loss.