Smaller cost distortions occur when the traditional systems' single indirect-cost rate and the activity-cost-driver rates ________.
A) use the same total costs for computations
B) are similar in proportion to each other
C) are more different than alike
D) use the same cost driver units

Question

Quizplus · Accepted Answer

When the indirect-cost rate and activity-cost-driver rates are similar in proportion to each other, smaller cost distortions occur. This is because using similar proportions can help minimize the impact of fluctuations in one driver on the overall cost allocation.

Smaller Cost Distortions Occur When the Traditional Systems' Single Indirect-Cost