Short Answer Questions 1. Activity-based costing methods use four steps in computing a product's cost. What are these steps? 2. What is a cost driver? Give three examples. than under The vice president of marketing wonders how products can cost less under one cost system another. How would you respond to her question "Aren't costs cut-and-dried?" 3. 4. A drawback to activity-based costing is that it requires more record-keeping and extensive teamwork between all departments. What are the potential benefits of a more detailed product cost system? 5. Give three eriteria for choosing cost drivers for allocating costs to products. ty-based costing assigns costs to activities that consume resources and the products based on each produet's use of activities. What is a benefit of this approach compared to a traditional approach that 6. Activi allo cates costs to products based on the machine-hours or labor hours used to produce the product