Which of the following statements is correct about the differences between a volume-based cost system and an ABC system?
A)The only difference is how the methods assign indirect costs to products.
B)The only difference is how the methods assign direct costs to products.
C)The methods assign both direct and indirect costs differently to products.
D)There is no difference in how the methods assign direct or indirect costs to products.

Question

Quizplus · Accepted Answer

Volume-based costing systems primarily differ from Activity-Based Costing (ABC) systems in the way they allocate indirect costs to products. Volume-based systems typically use a single, volume-related basis to allocate all overhead costs, while ABC systems use multiple drivers, including both volume and non-volume based drivers, to allocate costs more accurately based on the actual activities that incur costs.

Which of the Following Statements Is Correct About the Differences