In an Approximately Relevant ABC System

question 202

Multiple Choice

In an approximately relevant ABC system

• A)all activities still are separated into pools; they are allocated on estimated activity levels.
• B)only the most expensive activities are allocated using appropriate cause-and-effect drivers.
• C)cost pools are limited to only two cost pools.
• D)none of these.

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Definitions:

Utility Function

A mathematical representation of how different combinations of goods or services generate levels of happiness or satisfaction for an individual.

Probability

A measure of the likelihood of an event occurring, expressed as a number between 0 and 1.

Actuarially Fair Rates

Insurance rates that are set based upon a fair assessment of the expected risks and payouts, ensuring no expected profit or loss for the insurer.

Insurance Premiums

Payments made regularly to an insurance company in exchange for coverage, ensuring financial protection against specified risks.