Companies that use traditional accounting systems may aggregate and assign cost data accurately, so cost managers need not consider an activity-based approach to identify true costs and make better decisions.

Question

Quizplus · Accepted Answer

Traditional accounting systems often allocate overhead costs based on a single volume measure, which can lead to inaccurate cost information. Activity-based costing (ABC) provides a more accurate method by assigning costs based on the activities that drive them, allowing for better decision-making.

Companies That Use Traditional Accounting Systems May Aggregate and Assign