ECONOMICS

Detailed explanation-1: -The differences are in the accuracy and complexity of the two methods. Traditional costing is more simplistic and less accurate than ABC, and typically assigns overhead costs to products based on an arbitrary average rate. ABC is more complex and more accurate than traditional costing.

Detailed explanation-2: -Which of the following is true about activity-based costing? Explanation: ABC assumes that the resource-consuming activities that generate costs are activities and not outputs. ABC is appropriate for all types of cost accumulation systems, including both job order and process costing.

Detailed explanation-3: -(B) Traditional costing treats only unit level costs as variable, while ABC systems treat unit level, batch level and product level costs as variable. Answer: (C) Traditional cost allocations are usually based on a plant wide overhead rate, while ABC systems use departmental overhead rates.