Because Activity-Based Costing Considers the Resources Each Product Actually Uses,it

question 236

Multiple Choice

Because Activity-Based Costing considers the resources each product actually uses,it

• A) results in product costs being calculated more accurately.
• B) computes allocation rates based primarily on direct labor rates.
• C) ultimately calculates a single plantwide allocation rate.
• D) can only be used in companies which have process costing.

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Definitions:

Average Variable Cost

The total variable expenses divided by the number of units produced, representing the variable cost per unit.

Average Total Cost

The total cost of production divided by the number of goods produced, representing the average cost per unit of output.

Profit-maximizing Firm

A business organization that focuses on making the highest possible profit by adjusting its production and pricing strategies.

Marginal Cost

The rise in overall expenses associated with the creation of an extra unit of a good or service.