Lako Systems Is Calculating the Firm's Training Costs

question 92

Multiple Choice

Lako Systems is calculating the firm's training costs. While they were able to easily account for the direct costs of the programs, their calculations were somewhat misleading because they left out the indirect costs associated with

• A)lost productivity.
• B)employee travel.
• C)trainers' salaries.
• D)meeting site fees.

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Definitions:

Activity-Based Costing

An accounting method that assigns costs to products or services based on the activities they require, aiding in more accurate product costing.

Cost Per Unit

The total expense incurred to produce, store, and sell one unit of a product, calculated by dividing total costs by the number of units produced.

Activity Cost Pools

A category in cost accounting where costs are allocated based on specific activities, allowing for more accurate determination of the sources of overhead.

Activity-Based Costing

A costing methodology that assigns costs to products and services based on the activities and resources that go into their production.