Answer the following questions using the information below:
Products S5 and CP8 each are assigned $50.00 in indirect costs by a traditional costing system.An activity analysis revealed that although production requirements are identical,S5 requires 45 minutes less set-up time than CP8.
-According to an ABC system,S5 uses a disproportionately:
A)smaller amount of unit-level costs.
B)larger amount of batch-level costs.
C)larger amount of unit-level costs.
D)smaller amount of batch-level costs.

Question

Quizplus · Accepted Answer

Since S5 requires 45 minutes less set-up time than CP8, it uses a smaller amount of batch-level costs. Set-up time is considered a batch-level activity in Activity-Based Costing (ABC) systems, meaning costs are incurred for each batch rather than each unit produced.

Answer the Following Questions Using the Information Below