Which of the Following Statements Concerning Cost Drivers Is Incorrect

question 23

Multiple Choice

Which of the following statements concerning cost drivers is incorrect?

• A) Inaccurate application of overhead to products can lead to wrong conclusions about which products are profitable.
• B) As direct labour shrinks as a proportion of manufacturing costs it becomes a more accurate factor by which to apply overhead to products.
• C) A cost driver is a measure of the activity that causes overhead costs.
• D) In modern day manufacturing there has been a decline in labour costs and an increase in factory overheads as a percentage of product costs.

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Definitions:

Interquartile Range

The difference between the 75th and 25th percentiles of a data set, representing the middle 50% of values.

Range

The difference between the highest and lowest values in a data set, giving a measure of the data’s dispersion.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how spread out the values are from the mean.

Variance

A measure of variability that quantifies the spread of a set of data points or the dispersion of a distribution around its mean.