Traditional costing systems employ multiple allocation rates, but an activity-based costing system uses only one rate for allocating manufacturing overhead.

Question

Quizplus · Accepted Answer

Activity-based costing systems use multiple activity rates to allocate overhead costs based on the specific activities that consume resources, rather than using a single overhead rate based on traditional cost drivers such as direct labor hours or machine hours.

Traditional Costing Systems Employ Multiple Allocation Rates, but an Activity-Based