An Activity-Based Costing System Involves Identifying the Activity That Causes

question 60

Multiple Choice

An activity-based costing system involves identifying the activity that causes the incurrence of a cost; this activity is known as a:

• A)cost driver.
• B)cost applier.
• C)direct cost.
• D)cost object.

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Definitions:

Activity-Based Budgeting

A budgeting approach where budgets are developed based on the activities and resources needed to achieve specific goals or outputs.

Benefits of Budgeting

Benefits of budgeting include providing a financial framework for decision making, setting financial targets, and monitoring financial performance against those targets.

Production Budget

A forecast of the units that must be produced to meet anticipated sales, used in planning the required production levels.

Rolling Budget

A financial plan that is continually updated by adding a new period (month, quarter, etc.) as the current period concludes, ensuring the budget extends a constant length into the future.