Activity Based Costing

This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.

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July 16, 2017 at 10:25 am #396261
shik1807
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Short term variable costs should be traced to products using volume related cost drivers(labor hours/ machine hours..) and volume related cost drivers are inappropriate for tracing most long term variable costs to products because they are driven by complexity and diversity. Is this correct?
What about long term variable overhead costs??
Is the cost driver the volume of activity?
July 17, 2017 at 8:36 am #396845
John Moffat
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It is correct and is simply saying that in the long-term there is unlikely to be one constant cost-driver. However, it is not really relevant for the exam.
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