All of the Following Statements Are Correct Except That

question 153

Multiple Choice

All of the following statements are correct except that

• A) activity-based costing has been widely adopted in service industries.
• B) the objective of installing ABC in service firms is different than it is in a manufacturing firm.
• C) a larger proportion of overhead costs are company-wide costs in service industries.
• D) the general approach to identifying activities and activity cost pools is the same in a service company as in a manufacturing company.

---

Definitions:

Convertible Bonds

Bonds that can be converted into a predetermined number of a company’s shares at certain times during their life, usually at the discretion of the bondholder.

Diluted Earnings Per Share

A metric that calculates the quality of earnings per share (EPS) if all convertible securities were converted into common stock, indicating the potential dilution that could occur.

Diluted EPS

Earnings per share calculated under the assumption that all convertible securities and options have been converted into additional shares, potentially lowering the EPS.

Stock Options

Contracts that give the holder the right, but not the obligation, to buy or sell a stock at a specific price before a certain date.