Indicate whether each of the following statements about the traditional and activity- based methods of allocating overhead is true or false. Activity based costs tends to be more accurate than the traditional method because the activity based costing method uses known information gathered at the end of the year whereas the traditional method uses information which is estimated before the year begins. Activity-based costing works well for assigning overhead costs to products, but cannot be used to allocate costs to other types of cost objects such as services, processes, etc. Activity-based costing results in less overhead being charged to cost objects than the traditional overhead allocation method. Once calculated, the predetermined rates used to charge overhead costs to cost objects do not need to be recalculated in subsequent periods. 1. True 2. False There is no advantage to using activity-based costing to charge direct costs to products The complexity of an activity based system depends on the intended use of the information it provides. The traditional method of charging overhead to cost objects allocates overhead costs to cost objects based on the object's consumption of one particular activity Activity based costing is based on the assumption that costs can be identified reasonably well with activities, and activities can be identified reasonably well with products When using activity-based costing, the amount of overhead allocated to a cost object is determined by the cost object's consumption of activities The main advantage of using activity-based costing is that it can determine the correct amount of overhead to charge to cost objects