Which of the following statements is true with regard to activity-based costing?

Multiple Choice

• Activity rates are computed by dividing budgeted activity usage by budgeted activity cost.

• The basic principle underlying activity-based costing is that activities are what cause overhead cost to be incurred.

• Activity-based costing often results in low-volume complex products being undercosted, and high-volume simpler products being overcosted.

• All cost drivers used to determine the rates will be unit-level drivers.

• Activity-based costing rates are the same as departmental overhead rates.