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:

Two-dimensional Framework

An analytical model that uses two variables or axes to explore or map complex relationships or systems.

Conflict Management

The practice of identifying and handling conflicts in a sensible, fair, and efficient way to minimize negative effects and potentially gain positive outcomes.

Productive Aspects

Elements or characteristics that contribute to the efficiency or effectiveness of a process, task, or system.

Mutual Adjustment

A process in negotiation where both parties make concessions or changes to their positions to reach a mutually acceptable agreement.