Which of the following statements is true of activity-based costing? Multiple Choice ABC ignores the allocation of marketing costs. ABC classifies some indirect costs as direct costs. ABC is more likely to result in big differences from a traditional costing system if the business makes only one product rather than multiple products. Activities are the cost objects of the second stage of ABC. Aces, Inc., a manufacturer of tennis rackets, began operations this year. The company produced 6,000 rackets and sold 4,900. At year-end, the company reported the following Income statement using absorption costing. Sales (4,900 x $90) Cost of goods sold (4,900 x $38) Gross margin Selling and administrative expenses $441,000 186,200 $254,800 75,000 $179,800 Net income Production costs per tennis racket total $38, which consists of $25 in varliable production costs and $13 in fixed production costs (based on the 6,000 units produced). Ten percent of total selling and administrative expenses are variable. Compute net income under variable costing. Multiple Choice $194,100 $165,500 $31,000