ABC systems differ from traditional systems in that ABC systems A. Assign costs only to units of product B. Use multiple cost pools and cost drivers to allocate overhead costs C. Trace direct costs to cost objects D. Use multiple cost pools and cost drivers to allocate direct costs

Question

Business

Contreras

20 December, 19:12

ABC systems differ from traditional systems in that ABC systems A. Assign costs only to units of product B. Use multiple cost pools and cost drivers to allocate overhead costs C. Trace direct costs to cost objects D. Use multiple cost pools and cost drivers to allocate direct costs

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Answers (1)

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Melody Haynes · Answer 1

The correct answer is B

Explanation:

ABC stands for Activity - based Costing, which is the method or approach of costing that recognized the activities in the firm or business and then assign or allocate the cost of every activity to all the products as well as services as per the actual consumption by each.

In this system of costing, this model or method allocate more overhead or indirect costs into the direct costs as compare to the conventional or traditional method of costing.

So, the difference is that ABC use the multiple cost pools as well as cost drivers to assign the overhead costs.