Which TWO of the following statements about activity-based costing (ABC) are true? a. Implementation of ABC is unlikely to be cost effective when variable production costs are a low proportion of total production costs . b. In a system of ABC, for costs that vary with production levels, the most suitable cost driver is likely to be direct labour hours or machine hours. c. Activity based costs are the same as relevant costs for the purpose of short-run decision-making. d. Activity based costing is a form of absorption costing
Which TWO of the following statements about activity-based costing (ABC) are true? a. Implementation of ABC is unlikely to be cost effective when variable production costs are a low proportion of total production costs . b. In a system of ABC, for costs that vary with production levels, the most suitable cost driver is likely to be direct labour hours or machine hours. c. Activity based costs are the same as relevant costs for the purpose of short-run decision-making. d. Activity based costing is a form of absorption costing
Chapter1: Financial Statements And Business Decisions
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Transcribed Image Text:Which TWO of the following statements about activity-based costing (ABC) are true?
a. Implementation of ABC is unlikely to be cost effective when variable production costs are a low proportion of
total production costs
.b. In a system of ABC, for costs that vary with production levels, the most suitable cost driver is likely to be direct
labour hours or machine hours.
c. Activity based costs are the same as relevant costs for the purpose of short-run decision-making.
d. Activity based costing is a form of absorption costing
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