What is the validity of the following statements? (1) Activity-based costing sees overheads as rendering a service to cost units. (2) Activity-based costing views direct labour hou... What is the validity of the following statements? (1) Activity-based costing sees overheads as rendering a service to cost units. (2) Activity-based costing views direct labour hours as the most important cost driver.
Understand the Problem
The question is asking for the validity of two statements regarding activity-based costing, prompting the responder to determine which of the provided options correctly describes the truthfulness of both statements.
Answer
C (1) False, (2) True.
The correct answer is C (1) False, (2) True.
Answer for screen readers
The correct answer is C (1) False, (2) True.
More Information
Statement (1) is false because activity-based costing assigns overheads to specific activities rather than seeing them as a service to cost units. Statement (2) is true as direct labour hours can often be a significant cost driver in activity-based costing.
Tips
Avoid assuming traditional costing views apply in activity-based costing; it focuses on different cost drivers.
Sources
- ch11 mylab.docx - Course Hero - coursehero.com
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