Which of the Following Statements Is Incorrect

question 112

Multiple Choice

Which of the following statements is incorrect?

• A) An activity-based costing system uses more cause-and-effect relationships in tracing costs than does a traditional cost allocation system.
• B) An activity-based costing system first assigns or traces costs to the departments in which products are made.
• C) The hierarchical categories into which activities are grouped are unit-level, batch-level, product-level, and facility-level activities.
• D) The total amount of unit-level costs changes in proportion to the number of units of product made.

---

Definitions:

Net Operating Income

A measure of a company's profitability that excludes non-operating income and expenses, such as interest.

Operating Assets

Assets used in the day-to-day operations of a business, contributing to the generation of revenue.

Turnover

A financial metric indicating the rate at which inventory is sold or the rate at which employees leave and are replaced in a business.

Net Operating Income

The profit a company generates from its operations, excluding taxes and interest, calculated as revenues minus expenses.