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:

Temporal Lobes

Regions of the cerebral cortex located beneath the temples, important for processing auditory information and for memory and speech.

Sense of Hearing

The ability to perceive sound by detecting vibrations through the ear.

Parietal Lobe

The part of the brain located behind the frontal lobe, responsible for processing sensory information regarding the location of parts of the body as well as interpreting visual information and processing language and mathematics.

Art Museum

A public or private institution that collects, conserves, and exhibits works of art for education, study, and enjoyment of the public.