Question
14. Select the incorrect statement regarding the use of cost drivers in activity-based costing systems. A. ABC uses volume-based and activity-based cost drivers. B. Volume-based
14. Select the incorrect statement regarding the use of cost drivers in activity-based costing systems.
A. ABC uses volume-based and activity-based cost drivers.
B. Volume-based drivers are most appropriate for costs that are affected by the number of units produced.
C. ABC's use of multiple cost drivers will produce less precise unit costs when a company produces many different products that require different types and levels of overhead costs.
D. An arbitrary cost driver must be selected when allocating facility-level activity costs.
15.Miller Company makes two types of chairs. One of the chairs is a rocking chair. The other is a straight-back chair. Both chairs are made by hand. Miller Company uses a company-wide overhead rate that is based on direct labor hours to assign overhead costs to the two products. If Miller automates the production of straight-back chairs and continues to use direct labor hours as a company-wide allocation basis:
A. rocking chairs will be overcosted.
B. straight back chairs will be overcosted.
C. rocking chairs will be undercosted.
D. there should be no impact on unit cost.
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