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.

---

Definitions:

Ordinary Mole

A common type of skin growth that often appears as a small, dark brown spot and is generally harmless.

Diameter

The length of a straight line passing from side to side through the center of a body or figure, especially a circle or sphere.

Ordinary Mole

A common, small, and usually benign skin growth made up of melanocytes, cells that produce the pigment melanin.

Melanoma

A dangerous form of skin cancer that arises from melanocytes, the cells that produce the pigment melanin, which gives skin its color.