Which one of the following statements is INCORRECT?

a) Traditional costing systems tend to allocate too small a proportion of overheads to high volume products and too great a proportion of overheads to low volume products.

b) In manufacturing, ABC is more appropriate than traditional absorption costing when the consumption of resources on overhead activities is not related to production volumes.

c) ABC can be used for customer profitability analysis.

d) A single cost driver may not explain the level of expenditure on an activity.

For which of the following costs might the number of machine hours worked be a cost driver?

a) Set-up costs

b) Short-run variable overhead costs

c) Materials handling and dispatch costs

d) Product development costs

Which of the following is most likely to be the cost driver for production scheduling costs?

a) Number of orders

b) Number of production runs

c) Volume of output

d) Volume of materials handled

In ABC, brand management might be an example of a:

a) product level activity

b) batch level activity

c) product-sustaining activity

d) facility-sustaining activity

Which one of the following statements is INCORRECT?

a) In ABC, direct labour hours or direct machine hours may be used to trace costs to products.

b) The cost driver for quality inspection is likely to be number of hours worked on the product.

c) In ABC, activity costs are absorbed into product costs using an activity cost per unit of cost driver as the absorption rate.

d) ABC may be used for cost and management accounting by service organisations.