Chapter 4, Problem 4.1DI

Indicate whether the following statements are true or false.

(a) The reasoning behind ABC cost allocation is that products consume activities and activities consume resources.

(b) Activity-based costing is an approach for allocating direct labor to products.

(c) In today's increasingly automated environment, direct labor is never an appropriate basis for allocating costs to products.

(d) A cost driver is any factor or activity that has a direct cause-effect relationship with resources consumed.

(e) Activity-based costing segregates overhead into various cost pools in an effort to pro­vide more accurate cost information.