Select the Incorrect Statement Regarding the Use of Cost Drivers

question 143

Multiple Choice

Select the incorrect statement regarding the use of cost drivers in activity-based costing systems.

• A) ABC uses volume-based and activity-based cost drivers.
• B) Volume-based drivers are most appropriate for costs that are affected by the number of units produced.
• C) ABC's use of multiple cost drivers will produce less accurate unit costs when a company produces many different products that require different types and levels of overhead costs.
• D) An arbitrary cost driver must be selected when allocating facility-level activity costs.

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Definitions:

Goose Decoys

Artificial birds used by hunters to attract real geese into shooting range or by birdwatchers for observation.

Null Hypothesis

A theory that there is no statistical significance between specified populations, any observed difference being due to sampling or experimental error.

Golf Balls

Small, hard balls used in the game of golf, designed with dimples to reduce air resistance and increase distance when hit.

PGA

Professional Golfers' Association, an organization for professional golf players, or a reference to the tour operated by this organization.