The use of activity$-$based costing $($ABC$)$ normally results in

A$)$ Substantially greater unit costs for low$-$volume products than is reported by traditional

product costing.

B$)$ Substantially lower unit costs for low$-$volume products than is reported by traditional

product costing.

C$)$ Decreased setup costs being charged to low$-$volume products.

D$)$ Equalizing setup costs for all product lines.

$2.$ In allocating factory service department costs to producing departments, which one of the

following items would most likely be used as an activity base?

A$)$ Units of product sold

B$)$ Salary of service department employees

C$)$ Units of electric power consumed

D$)$ Direct materials usage

$3.$ A corporation allocates indirect corporate overhead costs to its operating divisions. The

company uses a cause$-$and$-$effect criterion in the selection of appropriate allocation bases. Which

of the following would be an appropriate allocation base to assign the costs of the corporate

personnel department to the operating divisions using a cause$-$and$-$effect criterion?

A$)$ Number of employees in each division

B$)$ Square footage of space occupied by each division

C$)$ Total service years of employees in each division

D$)$ Total book value of identifiable division assets