The Risk of Cost Distortion Is Minimized with Activity-Based Costing

question 9

Multiple Choice

The risk of cost distortion is minimized with activity-based costing by applying overhead using:

• A)a single cost driver rate.
• B)multiple cost driver rates.
• C)an absorption costing rate.
• D)direct costing rates.

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Definitions:

Purchase-Money Security Interest (PMSI)

A security interest formed when a debtor uses borrowed money from the secured party to buy the collateral.

Unsecured Party

A creditor or lender that does not have rights to specific collateral if the borrower defaults.

Collateral

The property that is subject to a secured interest.

Collateral

An asset or property that a borrower offers to a lender as security for a loan, which can be seized if the loan is not repaid.