If the Total Activity Cost Were Unknown, It Could Be

question 59

Multiple Choice

If the total activity cost were unknown, it could be calculated by:

• A) Dividing the total activity driver by the activity rate.
• B) Multiplying the total activity driver by the activity rate.
• C) Adding the total activity driver to the activity rate.
• D) Subtracting the activity rate from the total activity driver.

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Definitions:

Variable Costing

An accounting approach where only variable production costs (direct materials, direct labor, and variable manufacturing overhead) are included in product costs, with fixed overhead treated as a period expense.

Unit Product Cost

The total cost associated with producing a single unit of product, including direct materials, direct labor, and allocated overhead.

Absorption Costing

An accounting method that includes all manufacturing costs (direct labor, direct materials, and both variable and fixed manufacturing overhead) in the cost of a product.

Unit Product Cost

The total cost (both fixed and variable) incurred to produce, store, and sell one unit of a product.