Which Is NOT a Characteristic of a Unit-Based Costing System

question 34

Multiple Choice

Which is NOT a characteristic of a unit-based costing system?

• A) It uses traditional product costing definitions.
• B) It uses unit-based activity drivers to assign overhead to products.
• C) It is cheaper than an activity-based costing system.
• D) It offers greater product costing accuracy than an activity-based costing system.

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Definitions:

Standard Variable Overhead Rate

The rate used in budgeting and costing that applies variable overheads to a specific activity basis such as labor hours.

Direct Labour Hours

The aggregate hours employees devoted to the process of production have logged.

Variable Overhead

Costs that vary with the level of output, such as utilities and labor, as opposed to fixed overheads.

Actual Direct Labour Hours

The actual time spent by labor directly involved in the production of goods or service delivery.