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Sardini Machining implemented an activity-based costing system. They identified machine setup as a batch-level activity and determined the cost per setup to be $860. After
Sardini Machining implemented an activity-based costing system. They identified machine setup as a batch-level activity and determined the cost per setup to be $860. After reviewing the information, management concluded that the company can reduce costs substantially by producing fewer, but larger batches, thus reducing the number of setups needed. If the change is made, Sardini will not experience significant cost savings UNLESS A) the costs saved by performing fewer setups are offset by increased costs to store the larger batches awaiting processing. B) a large percentage of the costs related to performing setups are fixed costs. C) the time required to perform setupsl will be reduced significantly. D) a large percentage of the costs related to performing setups are batch-level costs
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