Which of the Following Is a Reason for an Activity-Based

question 134

Multiple Choice

Which of the following is a reason for an activity-based management (ABM) system breakdown?

• A)Lack of support from higher-level management
• B)Increase in costs of production due to implementation of the ABM model
• C)Inaccurate assignment of costs to cost objects due to implementation of the ABM model
• D)Ignorance of presence of waste in activities

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Definitions:

Overhead Rates

Ratios used to allocate indirect costs to products or services, based on a predetermined activity base such as labor hours or machine hours.

Machine-Hours

A measure of production time, referring to the total hours that machinery is operated in the manufacturing process.

Predetermined Overhead Rate

A rate calculated before a period begins, used to allocate manufacturing overhead to products based on a certain activity base.

Customizing Department

A specialized department in a company that modifies products to meet specific customer requirements or preferences.