Activity based costing system differs from traditional costing systems in the treatment of ________.
A) direct labor costs
B) direct material costs
C) prime costs
D) indirect costs

Question

Quizplus · Accepted Answer

Activity-based costing system focuses on identifying all activities that contribute to the production of a product and assigning their costs to the product. Indirect costs, which are often difficult to allocate accurately in traditional costing systems, are assigned to products based on their usage of different activities. Direct labor costs, direct material costs, and prime costs are typically treated similarly in both traditional and activity-based costing systems.

Activity Based Costing System Differs from Traditional Costing Systems in the Treatment