Which of the Following Statements Is True of Activity-Based Costing

question 128

Multiple Choice

Which of the following statements is true of activity-based costing?

• A) Activity-based costing ignores the allocation of marketing and distribution costs.
• B) Activity-based costing is more likely to result in major differences from traditional costing systems if the firm manufactures only one product rather than multiple products.
• C) Activity-based costing classifies some of the indirect costs as direct costs.
• D) Chances of product-cost cross-subsidization are higher in activity-based costing compared to traditional costing systems.

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Definitions:

Average Interitem Correlations

A statistic used to measure the consistency of responses among related items on a questionnaire or test, indicating the scale's internal reliability.

Reliability Estimate

A statistical measure that quantifies the consistency of a set of measurements or ratings.

Validity

The extent to which a concept, conclusion, or measurement is well-founded and corresponds accurately to the real world.

Construct

A hypothetical variable that is used to explain behavior in theories and models within the psychological and social sciences.