The accounts department investigates all applications from new customers for credit sales. It has incurred a cost of Rs.2,500 in January to investigate 100 customer applications. The accounts department has apportioned the cost as Rs1,250 each to division A and B because each has the same level of sales. The manager of division A has claimed that this is unfair because she only asked for 20 investigations while division B asked for 80 investigations. Which of the following statements is correct ? (i)Activity based costing would charge Rs. 500 to division A and Rs.2,000 to division B. (ii)Activity based costing forecasts that the customer investigation costs for February will be Rs 500 for division A and Rs.2,000 for division B. (iii) Activity based costing makes managers more aware of the cost incurred by their operations.
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