Which of These Are Possible Cost Drivers Under Activity-Based Costing

question 3

Multiple Choice

Which of these are possible cost drivers under activity-based costing?

• A) hours of storage of raw materials
• B) number of deliveries
• C) number of set-ups of machinery
• D) all of the above

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Definitions:

Profit-Maximizing Price

The price level at which a company can sell its product to maximize its profit, calculated by understanding demand and cost structures.

Lerner Index

A measure of a firm's market power, calculated as the difference between price and marginal cost relative to price.

Perfect Competition

A market structure characterized by a large number of small firms, identical products, perfect information, and no barriers to entry or exit.

Multiplant Firm

A company that operates in more than one location, often to take advantage of different regional resources or markets.