Which of the Following Statements Concerning Cost Drivers Is Incorrect

Multiple Choice

Which of the following statements concerning cost drivers is incorrect?

A) As direct labour shrinks as a proportion of manufacturing costs it becomes a more accurate factor by which to apply overhead to products.
B) A cost driver is a measure of the activity that causes overhead costs.
C) In modern day manufacturing there has been a decline in labour costs and an increase in factory overheads as a percentage of product costs.
D) Inaccurate application of overhead to products can lead to wrong conclusions about which products are profitable.