The overhead rates of the traditional-based approach to product costing use
A)nonunit-based cost drivers.
B)unit-based cost drivers.
C)process costing.
D)job-order costing.

Question

Quizplus · Accepted Answer

The traditional-based approach to product costing uses unit-based cost drivers to allocate overhead costs. These cost drivers are typically based on units produced, direct labor hours or machine hours. Therefore, choice B is the best answer since it correctly represents the method of allocation used in the traditional-based approach to product costing. Choices C and D are specific costing methods that can use unit-based or nonunit-based cost drivers, and choice A is incorrect since the traditional-based approach to product costing explicitly relies on unit-based cost drivers.

The Overhead Rates of the Traditional-Based Approach to Product Costing