Tom Participates for 100 Hours in Activity a and 450

question 98

True/False

Tom participates for 100 hours in Activity A and 450 hours in Activity B, both of which are nonrental businesses.
Both activities are active.

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Definitions:

Activity-Based Costing

A costing methodology that assigns expenses to products or services based on the activities that go into their production or delivery.

Machine-Hours

A unit of measure representing the operating time of a machine, used in cost accounting to allocate machine-related overheads to products.

Product Margin

The profit made on selling a product, calculated by deducting the total cost of production from the sales revenue of the product.

Activity-Based Costing

A costing method that assigns costs to products based on the activities they require.