In Which of the Following Scenarios Does Duration-Based Costing Match

question 120

Multiple Choice

In which of the following scenarios does Duration-Based Costing match Activity-Based Costing?

• A)When there is no correlation between the consumption ratio and total activity time
• B)When the consumption ratio increases with an increase in total activity time
• C)When there is a direct correlation between activity cost and consumption ratio
• D)When the consumption ratio decreases with a decrease in total activity time

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Definitions:

Fair Value

An estimate of the market value of an asset or liability, based on current prices in an active market.

Book Value

The net value of a company's assets found on its balance sheet, which is calculated by subtracting liabilities from the total value of assets.

Commercial Substance

An economic concept indicating that a transaction significantly alters the cash flows or financial position of an entity.

Plant Assets

Long-term tangible assets used in the operation of a business that are not intended for resale, such as machinery, buildings, and land.