Which of the following is not true of activity cost drivers?
A)They are measures of the underlying activity that occurs in each activity cost pool.
B)They ideally have a cause and effect relationship with underlying activities.
C)They are strictly volume-based allocation measures.
D)They are used in Stage 2 cost allocations.

Question

Quizplus · Accepted Answer

Activity cost drivers are not strictly volume-based allocation measures. While they may be tied to volume, they ideally have a cause and effect relationship with underlying activities, and are used in Stage 2 cost allocations to allocate costs from activity cost pools to individual products, services, or customers.

Which of the Following Is Not True of Activity Cost