Which of the following statements is true?

Multiple Choice

• Second-stage allocation assigns overhead costs to activities.

• Second-stage allocation assigns activity costs to products or customers.

• Second-stage allocation assigns direct materials and direct labor to products.

• Second-stage allocation redistributes organization-sustaining costs to the batch-level and product-level activities. **incorrect**

Which of the following does not describe a difference between activity-based costing (ABC) and traditional absorption costing?

Multiple Choice

• ABC usually excludes manufacturing overhead from its calculations whereas traditional absorption costing includes it.

• ABC may assign nonmanufacturing and manufacturing costs to products whereas traditional absorption costing does not assign nonmanufacturing costs to products.

• ABC may exclude some manufacturing costs from its product costs whereas traditional absorption costing includes all manufacturing costs in its product cost calculations.

• ABC uses numerous cost pools to allocate costs to products whereas traditional absorption costing usually uses fewer cost pools. **Incorrect**