Question

The main difference between activity -based costing and traditional costing systems is that activity -based costing uses a separate allocation base for each activity.

a. True
b. False

Answer 1

True

Step-by-step explanation:

True

in activity based costing system the cost for each activity is assigned on the basis of past consumption by each activity. Therefore cost on each activity of product and service is induced. As a result of which more overhead cost need to assigned over direct cost.

However in the traditional style of costing the main concern is on profit. It is less accurate and but simple than activity base costing system.