What are your thoughts on these posts? Respond with examples and explain why you agree with this statements 1. Tradition

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What are your thoughts on these posts? Respond with examples andexplain why you agree with this statements
1. Traditional volume-based cost allocation systems cancertainly be considered antiquated when examining product costs.This is caused by two potential oversights that can occur whencosting with traditional costing systems. The first distortion ofcosts can occur when the manufacturer produces different productsin both high and low volume quantities. For instance, thesetraditional volume-based systems consider the entire productionvolume in the allocation of overhead costs onto all products, eventhough the high-volume products consume significantly lessoverhead. Meanwhile, the production of more intricate or customproducts will most often consume tremendously greater amounts ofoverhead, but the product cost will not be reflective of this. Thesecond cause of product cost distortions when using traditionalvolume-based costing is when there is a variance in the size,weight, and complexity of the products being manufactured. Intraditional accounting, there will be significant cost distortionssince both the direct labor costs and machine and labor hours arenot considered when assigning costs. This means that smaller, lesscomplex products will be overpriced, while larger, heavier, morecomplex products will become underpriced.
2. Traditional volume-based cost allocation systems aremore likely to distort product costs because the use of a singlecost driver, such as Direct Labor or Machine Hours, can over/undervalue costs for a company with multiple products which can lead tosetting inaccurate sales prices. Traditional methods also accountfor increasing overhead with increased cost drivers, but it can beinaccurate when compared to activity based costing which also leadsto distortions. While traditional methods are great for financialaccounting or P&L reports, ABC provides for better processanalysis and managerial decisions.
3. In a volume-based cost system the direct and indirectcosts are divided by the total amount of product to be producedwhich gives a cost per item. The cost is then divided between theproducts with the most volume getting assigned the most cost. Thisis not always accurate because as the chapter showed in the icecream example this led to distorted costs and margins showing thatvanilla and chocolate were not profitable when in fact they were.This distorted cost also showed that the special flavors wereprofitable when in fact they were not. If a company was to continueto follow these distorted costs then they would possibly decide tofocus on the specialty flavors which would lead to less and falserevenues being reported. This example shows why the activity-basedcosting system would work best in a manufacturing company thatproduces multiple products that require different resources toproduce.