APL Ltd allocates overhead to cost objects using a two-stage process. From this information, we can infer that APL
A) Uses a traditional costing system
B) Uses an activity-based costing system
C) May be using either a traditional or an activity-based costing system
D) Is reporting its product costs accurately

Question

Quizplus · Accepted Answer

The two-stage process could refer to using cost pools and cost drivers as part of an activity-based costing system, or it could refer to using predetermined overhead rates as part of a traditional costing system. Therefore, we cannot definitively say whether APL is using a traditional or activity-based costing system based on this information alone.

APL Ltd Allocates Overhead to Cost Objects Using a Two-Stage