Activity-Based Costing and Generally Accepted Accounting Principles Differ in That

question 126

Multiple Choice

Activity-based costing and generally accepted accounting principles differ in that ABC

• A)does not define product costs in the same manner as GAAP.
• B)cannot be used to compute an income statement,but GAAP can.
• C)is concerned only with costs generated from automated processes,but GAAP is concerned with costs generated from both manual and automated processes.
• D)information is useful only to managers,while GAAP information is useful to all organizational stakeholders.

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Definitions:

Pure Monopolist

An entity that is the sole provider of a product or service in a market, with no close substitutes, allowing for control over prices.

Nondiscriminating Pure Monopolist

A monopolistic market structure where a single seller offers a product to all consumers at the same price without price discrimination.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, indicating the additional value created beyond the opportunity cost.

Normal Profit

The lowest amount of profit a business must earn to stay relevant in its market by covering the costs of missed opportunities.