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Note 3 in question 1 says: 3. The allocations of fixed costs are based on a recent activity-based costing exercise and are considered to be valid. I
Is any particular implication of the fact that fixed costs are allocated based on an abc costing? It s a piece of information I ve ignored in the exam and I doubt is completly useless. They are split even between the two products… but if the volume of production will be increased as required in calculating performance gap… The fixed costs will move too (meaning they are not actually fix costs)? There isnt mentioned any cost driver based on which they are allocated to each product…
Thank you
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