The correct answers are: Activity-based costs can be used to identify relevant costs for decision-making; Activity-based costing cannot be used to cost services.

ABC is an alternative to traditional volume-based costing models, where production overhead is absorbed on the basis of the volume of direct labour hours or machine hours worked. However, it is still a form of absorption costing, because production overheads are absorbed into product costs. ABC identifies costs with support activities, and the overhead costs of a product or service could reflect the long-run variable cost of that product or service. ABC can be used for costing services as well as products, although in practice it has been used most by manufacturing organisations. Although ABC looks at the costs of activities, it is not a costing method for identifying relevant costs for decision-making.