The Use of Unit-Based Activity Drivers to Assign Costs Can

question 170

Multiple Choice

The use of unit-based activity drivers to assign costs can result in significant cost distortions only if:

• A)overhead costs are a small percentage of total manufacturing costs.
• B)direct material costs are a significant percentage of total manufacturing costs.
• C)overhead costs are a significant percentage of total manufacturing costs.
• D)direct material costs are a small percentage of total manufacturing costs.

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Definitions:

Accounting Department

The division within a company that is responsible for managing financial transactions, records, and statements.

Service Firm

A business that provides intangible products or services to consumers or other businesses rather than physical goods.

Professional Staff

Employees who possess advanced degrees or certifications and are typically employed in jobs that require specialized knowledge or skills.

Budgeting Work

Budgeting Work involves preparing financial budgets by estimating future income and expenses, helping organizations plan for short and long-term objectives.