Which of the following statements is incorrect?
A) An activity-based costing system uses more cause-and-effect relationships in tracing costs than does a traditional cost allocation system.
B) An activity-based costing system first assigns or traces costs to the departments in which products are made.
C) The hierarchical categories into which activities are grouped are unit-level, batch-level, product-level, and facility-level activities.
D) The total amount of unit-level costs changes in proportion to the number of units of product made.

Question

Quizplus · Accepted Answer

An activity-based costing system first assigns or traces costs to the activities that cause them, not to the departments in which the products are made. After the costs are assigned to the activities, they are then traced to the products based on the resources used by each product's activities.

Which of the Following Statements Is Incorrect