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A Traditional Cost Allocation System May Distort Product Costs Because

Question 40

Multiple Choice

A traditional cost allocation system may distort product costs because:


A) too many cost pools are used.
B) too many cost drivers are used.
C) of a lack of cause and effect associated with the cost drivers and the allocated costs.
D) they use estimates when allocating costs, whereas an activity-based costing system uses actual costs.

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