Under Activity-Based Costing, it is important for there to be a high correlation between the change in the level of costs and the change in the use of the driver on which those costs are allocated.

True

False

Probably the most critical step in ABCis identifying indirect costs.

True

False

Support department costs

are direct costs to the departments they support.

are considered period costs.

are allocated to the departments that they support.

None of the above.

The first stage of ABC is

identifying support departments and assigning their costs to products.

estimating the total amount of manufacturing overhead costs for the period.

estimating all direct materials and direct labor costs and dividing them by a cost driver.to assign

identifying and measuring the cost of activities used to produce various products.

ABC is based on the idea that

activities drive costs.

direct labor is the most appropriate cost driver for allocating overhead costs.

machine hours is the most appropriate cost driver in today's highly automated environment.

None of the above is correct.