Compared to a Traditional Costing System, an Activity-Based Costing System

question 91

Multiple Choice

Compared to a traditional costing system, an activity-based costing system usually involves

• A) Fewer cost pools
• B) More cost pools
• C) bigger cost pools
• D) b and c

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Definitions:

Fabrication Department

A specialized section of a manufacturing company where raw materials are assembled, shaped, or processed into finished goods.

Logistics Department

A segment within a company responsible for managing the efficient flow of goods, services, and information from point of origin to point of consumption to meet customer requirements.

Operating Divisions

Parts of a company that focus on the core business functions, often segmented by product line, service area, or geographic location.

Variable Costs

Expenses that change in proportion to the level of activity or volume of production in a business.