Activity-Based Costing (ABC) Is an Accounting Method for Allocating Indirect

question 32

True/False

Activity-based costing (ABC) is an accounting method for allocating indirect and fixed costs to individual products or product lines based on the value-added activities going into that product.

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Definitions:

Long-Run Profits

Profits that a firm anticipates it can maintain over a lengthy period by adapting its production and costs.

Economic Profits

The profit a company makes after deducting both its explicit and implicit costs, differing from accounting profits.

Marginal Costs

The price increase associated with the creation of an extra unit of a product or service.

Average Total Costs

The total costs of production (fixed and variable costs combined) divided by the quantity of output produced.