Required information Skip to question We will learn how activity-based costing differs from the traditional cost accounting methods. Activity-based costing estimates the costs of the resources consumed by cost objects, such as products and customers; cost objects generate activities that consume costly resources. Activities form the link between costs and cost objects. The first step in the implementation of activity-based costing includes defining the activities, activity cost pools, and activity measures. The number and definitions of the activity cost pools and activity measures used by companies vary considerably. We will also learn how to use time-driven activity-based costing to assign costs to cost objects and to analyze capacity. Knowledge Check 01 Which of the following is an allocation base commonly used under the traditional methods for allocation of overhead costs? multiple choice 1 Number of batches. Direct labor-hours. Indirect materials. Number of customer orders. Knowledge Check 02 All of the following are differences between activity-based costing (ABC) and traditional absorption costing except _________.blank multiple choice 2 ABC may assign nonmanufacturing costs to products ABC allocates all manufacturing costs to products ABC uses many cost pools ABC may exclude some manufacturing costs, such as organization-sustaining costs