What is a major drawback of traditional costing methods?
Reasons to Use Traditional Costing

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5 questions
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1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
They are too complex to implement.
They assume all overhead costs are proportional to production volume.
They require too much data to be effective.
They are only applicable to service industries.
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
How does Activity-Based Costing (ABC) improve cost accuracy?
By using a single cost driver for all activities.
By ignoring overhead costs.
By focusing only on direct labor costs.
By using batch-level or product-level cost drivers.
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
In the example provided, how did the traditional method affect the cost of the small volume product?
It under-costed the product.
It had no effect on the product cost.
It over-costed the product.
It accurately costed the product.
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is a potential consequence of over-applying manufacturing overhead using traditional costing?
Improved product quality.
Increased product demand.
Underpricing the product.
Overpricing the product.
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Why might a company choose to use ABC over traditional costing?
ABC provides more accurate cost information.
ABC is simpler to implement.
ABC is only suitable for large companies.
ABC requires less data collection.
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