Select the incorrect statement regarding the use of cost drivers in activity-based costing systems.
A) ABC uses volume-based and activity-based cost drivers.
B) Volume-based drivers are most appropriate for costs that are affected by the number of units produced.
C) ABC's use of multiple cost drivers will produce less accurate unit costs when a company produces many different products that require different types and levels of overhead costs.
D) An arbitrary cost driver must be selected when allocating facility-level activity costs.

Question

Quizplus · Accepted Answer

This statement is incorrect because the use of multiple cost drivers in ABC is intended to produce more accurate unit costs by taking into account the different types and levels of overhead costs required for each product.

Select the Incorrect Statement Regarding the Use of Cost Drivers