The Overhead Application Rate Is Lower When an Activity-Based-Costing Approach

question 128

Multiple Choice

The overhead application rate is lower when an activity-based-costing approach is used than when a traditional approach is used because _____.

• A)less costs are incurred
• B)more costs are directly traced
• C)costs are spread over more value-chain activities
• D)non-value-added costs are eliminated

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Definitions:

Technical Requirements

Detailed specifications to which a product, service, or system must adhere.

Negotiable Instrument

A document in writing that promises to pay a specified sum of money, either upon request or at an agreed-upon date, with the document specifying the individual responsible for payment.

Enforceable Contract

A legal agreement that is valid and can be upheld in court.

Negotiable Instruments

Financial instruments that are transferable from one party to another, typically including checks, promissory notes, and bills of exchange.