Which of the following statements is true with regard to activity-based costing rates?

A) The premise of ABC is that activities are what cause costs to be incurred.
B) ABC is another way to refer to a multiple departmental rate situation.
C) There one basic stage to ABC.
D) ABC is simpler and less expensive to implement than other traditional methods of allocating overhead costs.
E) All cost drivers used to determine the rates will be unit-level drivers.

Question

shahanaz Tamanna · Accepted Answer

Final Answer : A, Explanation :  The premise of ABC is that activities, not departments or products, are what cause costs to be incurred. Therefore, ABC rates are based on the cost drivers of activities, which are the factors that cause activity costs to increase or decrease.

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