True or false Activity cost pools are factory overhead costs initially budgeted for activities, such as machine usage, inspections, moving, production setups, and engineering activities.

True

Explanation:

Under Activity based costing, overhead and indict costs are allocated to the products.  Activity based costing (ABC) lays emphasis upon the activities as basis for assignment of costs.

For instance, all costs related to manufacturing activities whether direct or indirect would be allocated to manufacturing activity and similarly production costs to production activities.

Activity cost pools represent those costs which were initially budgeted such as machine usage hours. These represent standards against which actual incurred overheads would be measured to identify variations and their causes.

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