Question

Select the correct statement from the following. Select one: A. In highly automated environments where companies produce many different products with varying levels of production, volume-based cost drivers are superior to activity-based drivers. B. If overhead costs are allocated based on activities, the amount of overhead allocated to a particular product can be reduced by increasing the number of activities required by the product, thereby spreading the overhead costs over more units. O C. Activity-based cost drivers produce a better cost allocation than volume-based drivers because they distribute only relevant costs to the appropriate products. D. Activity costs are considered irrelevant for decision-making because the cost of an activity will be avoided if the activity is eliminated.

Answer 1

C. Activity-based cost drivers produce a better cost allocation than volume-based drivers because they distribute only relevant costs to the appropriate products

Analysis:

option A) activity based drivers must be superior to volume based cost drivers. But in given problem it is reverse, so it is incorrect.

option B) incorrect

option D) Activity costs must be considered relevant. But in given options it is irrelevant, so it is incorrect.