Which of the Following Is NOT a Limitation of Activity-Based

question 121

Multiple Choice

Which of the following is NOT a limitation of activity-based costing?

• A) Maintaining an activity-based costing system is more costly than maintaining a traditional direct labour-based costing system.
• B) Changing from a traditional direct labour-based costing system to an activity-based costing system changes product margins and other key performance indicators used by managers. Such changes are often resisted by managers.
• C) In practice, most managers insist on fully allocating all costs to products, customers, and other costing objects in an activity-based costing system. This results in overstated costs.
• D) More accurate product costs may result in increasing the selling prices of some products.

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Definitions:

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how spread out the values in a data set are.

Normal Distribution

A continuous probability distribution that is symmetrical around the mean, showing that data close to the mean are more frequent in occurrence than data far from the mean.

T Statistic

The t statistic is a value used in statistical analysis to determine the significance of the difference between two sample means, relative to the sample variability.

Preliminary Analysis

An initial examination of data to check for possible errors, understand basic trends and assumptions, and determine the most appropriate statistical tests.