When comparing traditional costing systems to activity-based costing systems,the analysis reveals that ________.
A) high volume products are undercosted with traditional costing systems
B) high volume products are overcosted with traditional costing systems
C) low volume products are overcosted with traditional costing systems
D) both high volume and low volume products are undercosted with traditional costing systems

Question

Quizplus · Accepted Answer

Traditional costing systems, which allocate overhead based on direct labor or machine hours, tend to overcost high volume products, as they consume a larger portion of the overhead costs than low volume products. Activity-based costing systems, on the other hand, allocate overhead based on the activities that drive costs, leading to more accurate costing of products or services.

When Comparing Traditional Costing Systems to Activity-Based Costing Systems,the Analysis