a. 7. 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 8. The following statements have been made about traditional absorption costing and activity-based costing (ABC). 1. Traditional absorption costing may be used to set prices for products, but activity-based costing cannot. 2. Traditional absorption costing tends to allocate too many overhead costs to low volume products and not enough overheads to high-volume products. 3. Implementing ABC is expensive and time consuming Which of the above statements is/are true? a. 1 only b. 3 only c. 1, 2 and 3 d. 1 and 2 only