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:

Investments

Assets or items acquired with the goal of generating income or appreciation, such as stocks, bonds, real estate, or commodities.

Average Rate

The mean rate calculated over a period or series of events, often used in finance to describe average interest or return rates.

Return

The profit or loss derived from an investment over a particular period, usually expressed as a percentage.

Investment

Putting money into channels with the expectation of financial growth or profit generation.