Sedona Hats manufactures two different types of hat: Narrow Brim and Wide Brim. The companys overhead costs include $72,000 for machining, $48,000 for machine set-ups, and $36,000 for inspections. Sedona produced 15,000 Narrow Brim hats and 60,000 Wide Brim hats. Sedonas new cost accountant has compiled the following information:

If Sedona Hats uses activity-based costing, which of the following is not true?

A. In a traditional unit-based costing environment, Wide Brim hats (the large volume product) would bear a large fraction of costs that vary with the number of batches but do not vary with the number of units produced.

B. The amount of the machine set-up cost applied to Wide Brim hats is $32,000.

C. The amount of overhead applied to Narrow Brim hats is $48,400.

D. If Sedona Hats has an assembling cost pool, the number of parts would be an appropriate cost driver.

E. The $48,000 for machine set-ups is considered a product-level cost.

Direct labor hours Machine set-ups Machine hours Inspections Narrow Wide Brim Brim 24,000 36,000 40 80 6,000 18,000 60 90