i. 'Cost driver' is a widely used term in activity-based costing. What is a cost driver? What is the cost driver in conventional cost volume profit (CVP) analysis? How is the cost driver measured in conventional CVP analysis?
ii. In activity-based costing, costs are classified into unit level, batch level, product level and facility level. How are these categories typically handled in CVP analysis, where there are only two categories available: fixed or variable?
iii. In an environment where activity-based costing is necessary and appropriate, is the relevance of conventional CVP analysis enhanced or diminished? Explain.
iv. Explain the additional limiting assumption of using CVP analysis under activity-based costing.

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The Answer of i. 'Cost driver' is a widely used term in activity-based costing. What is a cost driver? What is the cost driver in conventional cost volume profit (CVP) analysis? How is the cost driver measured in conventional CVP analysis?
ii. In activity-based costing, costs are classified into unit level, batch level, product level and facility level. How are these categories typically handled in CVP analysis, where there are only two categories available: fixed or variable?
iii. In an environment where activity-based costing is necessary and appropriate, is the relevance of conventional CVP analysis enhanced or diminished? Explain.
iv. Explain the additional limiting assumption of using CVP analysis under activity-based costing.

I 'Cost Driver' Is a Widely Used Term in Activity-Based