ABC systems differ from traditional costing systems because ABC systems use
A) Multiple activity cost pools and cost drivers to allocate overhead costs
B) More automation and information technology to allocate overhead costs
C) Less automation and information technology to allocate overhead costs
D) a and b

Question

Quizplus · Accepted Answer

ABC systems use multiple activity cost pools and cost drivers to allocate overhead costs, which allows for a more accurate allocation of costs to products or services. Traditional costing systems tend to rely on a single cost driver, such as direct labor hours, which can result in inaccurate cost allocations. While ABC systems may also use automation and information technology, this is not a defining characteristic that distinguishes it from traditional costing systems.

ABC Systems Differ from Traditional Costing Systems Because ABC Systems