Which of the Following Statements About Activity-Based Costing (ABC)is Not

question 37

Multiple Choice

Which of the following statements about activity-based costing (ABC) is not true? (CIA adapted)

• A) In ABC,cost drivers cause costs to be linked to products.
• B) ABC is useful for assigning marketing and distribution costs.
• C) ABC differs from traditional costing systems in that products are not cross-subsidized.
• D) ABC is more likely to result in major differences from traditional costing systems if the firm manufactures only one product rather than multiple products.

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Definitions:

Materials Price Variance

A measure of the difference between the actual cost of materials and the expected cost at standard prices.

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the standard quantity expected to be used, multiplied by the standard cost per unit.

Correlation

A statistical measure that indicates the extent to which two or more variables fluctuate together.

Standards

Established criteria or benchmarks against which performance, quality, and compliance are measured.