Exhibit 10-8 -Refer to Exhibit 10-8.The Consumption Function Is

question 2

Multiple Choice

Exhibit 10-8

-Refer to Exhibit 10-8.The consumption function is

• A) C = 0.75(Y_d).
• B) C = $3,000 + 0.90(Y_d).
• C) C = $300 + 0.25 (Y_d).
• D) C = $300 + 0.75(Y_d).

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Definitions:

Overhead Costs

Expenses related to the operation of a business that cannot be directly attributed to a specific product or service, such as rent, utilities, and administration expenses.

Activity Rate

The predetermined overhead rate used in activity-based costing to allocate costs to products or services based on specific activities.

Activity-based Costing

A costing method that assigns costs to products or services based on the activities they require.

First-stage Allocation

The initial process of assigning overhead costs to different departments or cost centers in a business based on relevant criteria.