Question

1. True or False: Managerial decisions based on activity-based costing (ABC) information affect only volume-level, batch-level, and product-level costs.

2. True or False: A cost of quality system is based on the trade-off between incurring costs to meet product (or service) specifications and the costs of failing to meet those expectations.

Answer 1

1)

The given statement is True.

Supporting explanations:

Usually, the management believes that the costs assigned to the products based on the respective activity type will be for efficient. For example, the setup costs are assigned based on the number of setups in that particular manufacturing process. In the same way, respective costs are assigned based on their respective cost drivers will have more affect on volume leel, batch level and product level.

Hence, the given statement is correct.

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