A Critical Component of an Activity-Based Accounting System Is

question 9

Multiple Choice

A critical component of an activity-based accounting system is:

• A)The ability to accurately measure activities that consume cost.
• B)Few areas in the facility that capture costs.
• C)The ability to eliminate non-value-added activities.
• D)Flexible job-order costing information.

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Definitions:

Operating Income

The profit realized from a business's operational activities, calculated before interest and taxes.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the degree to which a company can increase profit by increasing sales.

Variable Costs

Charges that shift in alignment with the volume of production or service tasks.

Operating Income

Earnings before interest and taxes (EBIT), a measure of a company's profit generated from its core operations excluding the effects of financing and taxes.