Which of the Following Would Be a Reasonable Basis for Assigning

question 64

Multiple Choice

Which of the following would be a reasonable basis for assigning the materials handling costs to the units produced in an activity-based costing (ABC) system?

• A) Number of production runs per year.
• B) Number of components per completed unit.
• C) Amount of time required to produce one unit.
• D) Amount of overhead applied to each completed unit.

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Definitions:

Purchased Inventory

Inventory items that are bought from suppliers and used in the production of goods or services.

Acid-test Ratio

A liquidity metric that measures a company's ability to pay off its current liabilities without relying on the sale of inventory.

Total Prepaid Expenses

Total prepaid expenses refer to the cumulative amount of expenses paid in advance for goods or services to be received in the future, recorded as assets on the balance sheet.

Total Liabilities

The aggregate of all debts and financial obligations owed by a company to creditors at a given point in time.