Final answer:
FALSE. Activity-based costing analysis does not treat all activity costs as variable costs.
Step-by-step explanation:
FALSE. Activity-based costing (ABC) analysis takes a long-run perspective, but it does not treat all activity costs as variable costs. Instead, ABC focuses on identifying and allocating costs to specific activities or processes within an organization. These activities can be either fixed or variable costs depending on their relationship with the volume of output.
For example, consider a manufacturing company that produces different product lines. The costs associated with setting up and maintaining machinery may be considered fixed costs, as they do not vary with the quantity of products produced. On the other hand, the costs of raw materials and direct labor may be considered variable costs, as they increase or decrease with the quantity of products produced.
In summary, activity-based costing analysis considers both fixed and variable costs, depending on the activities or processes being analyzed.