Which statement about costing systems is true?
A) Due to technology and mass production, labour related allocation bases are sometimes considered arbitrary.
B) Traditional costing systems use a three stage cost allocation process.
C) Labour related allocation bases should never be used in service organisations.
D) Activity based costing does not use machine hours or other volume based allocation bases.

Question

Quizplus · Accepted Answer

Labour related allocation bases can be considered arbitrary in environments where technology and mass production have significantly reduced the proportion of direct labor costs in total production costs, making other bases more reflective of how costs are actually incurred.

Which Statement About Costing Systems Is True