Which of the following statements is (are)true? (1)Activity-based costs per unit are always greater than volume-based costs per unit.
(2)Volume-based costing has typically resulted in lower gross margins for high volume products and higher gross margins for low volume products.
A)Only (1)is true.
B)Only (2)is true.
C)Both (1)and (2)are true.
D)Neither (1)nor (2)are true.

Question

Quizplus · Accepted Answer

(1) is false, as activity-based costing allows for more accurate allocation of costs, which can sometimes result in a lower cost per unit. 
(2) is true, as volume-based costing often results in a higher overhead allocation to high volume products, which lowers gross margins, and a lower overhead allocation to low volume products, which raises gross margins.

Which of the Following Statements Is (Are)true? (1)Activity-Based Costs Per