Which of the following statements is TRUE of an activity-based costing system?
A) It uses separate predetermined overhead allocation rates for each activity.
B) It is not as accurate or precise as traditional costing systems.
C) It accumulates overhead costs by processing departments.
D) It is not as complex or as costly as traditional systems.

Question

Quizplus · Accepted Answer

An activity-based costing system uses separate predetermined overhead allocation rates for each activity in order to more accurately allocate overhead costs to products or services. It is generally considered to be more accurate and precise than traditional costing systems which use a single overhead allocation rate for all products or services.

Which of the Following Statements Is TRUE of an Activity-Based