Both activity-based costing and traditional costing allocate overhead costs to cost objects.

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Both activity-based costing and traditional costing allocate overhead costs to cost objects, but they differ in the way that overhead costs are assigned to cost objects. Traditional costing uses a single predetermined overhead rate based on a volume metric such as direct labor hours or machine hours, while activity-based costing uses multiple activity cost pools and cost drivers to allocate overhead costs based on the activities that consume them.

Both Activity-Based Costing and Traditional Costing Allocate Overhead Costs to Cost