Question

Select the incorrect statement regarding the use of cost drivers in activity based costing systems. Multiple Choice O ABC uses volume-based and activity based cost drivers. 0 Volume based drivers are most appropriate for costs that are affected by the number of units produced 0 ABC's use of multiple cost drivers will produce less accurate unit costs when a company produces many different products that require different types and levels of overhead costs. 0 An arbitrary cost driver must be selected when allocating facility level activity costs.

Answer 1

The incorrect statement is

ABC's use of multiple cost drivers will produce less accurate unit costs when a company produces many different products that requires different types and levels of overhead costs.

ABC system divides overheads into various different cost pools and different drivers are used to allocate those costs leading to a more accurate cost per unit

Volume based and activity based drivers are used under ABC