Which of the Following Is Not True of Activity Cost

question 104

Multiple Choice

Which of the following is not true of activity cost drivers?

• A)They are measures of the underlying activity that occurs in each activity cost pool.
• B)They ideally have a cause and effect relationship with underlying activities.
• C)They are strictly volume-based allocation measures.
• D)They are used in Stage 2 cost allocations.

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Definitions:

Job Description

A formal account of an employee's responsibilities, duties, and scope of work.

Reduction Strategy

A plan implemented to decrease the scale, scope, or operations of an organization, often as part of cost-cutting measures or organizational restructuring.

Stability Strategy

Essentially calls for maintaining the status quo. A company that adopts a stability strategy plans to stay in its current businesses and intends to manage them as they are already being managed. The organization’s goal is to protect itself from environmental threats. A stability strategy is frequently used after a period of retrenchment or after a period of rapid growth.

Diversification Strategy

A diversification strategy is used by companies that are adding new products, product lines, or businesses to their existing core products, product lines, or businesses.