Activity based costing systems include non-volume-based cost drivers.ABC systems should also include measures that capture factors other than volume,or non-volume based cost drivers.

Question

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ABC systems use non-volume-based cost drivers to allocate indirect costs to products or services. These non-volume-based cost drivers may include activities, such as setup time, quality inspections, or design changes, that consume resources but are not directly related to production volume or units produced. Including these non-volume-based cost drivers in the ABC system provides a more accurate picture of the actual costs of producing a product or providing a service.

Activity Based Costing Systems Include Non-Volume-Based Cost Drivers