Which of the Following Statements Is (Are)true? (1)Activity-Based Costs Per

question 63

Multiple Choice

Which of the following statements is (are) true? (1) Activity-based costs per unit are always greater than volume-based costs per unit.
(2) Volume-based costing has typically resulted in lower gross margins for high volume products and higher gross margins for low volume products.

• A)Only (1)is true.
• B)Only (2)is true.
• C)Both (1)and (2)are true.
• D)Neither (1)nor (2)are true.

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Definitions:

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows.

Payback Method

A capital budgeting technique that calculates the time required to recoup the cost of an investment.

Depreciation

The allocation of the cost of a tangible asset over its useful life.

Net Operating Income

The income earned from a company's everyday business operations, excluding taxes and interest.