A Major Advantage in Changing from a Traditionally-Based Costing System

question 44

Multiple Choice

A major advantage in changing from a traditionally-based costing system to an activity-based costing system is:

• A)A company's customers can benefit from any reduction in costs.
• B)Management will be able to identify the true cost of non-added-value activities.
• C)Direct labour and material costs will be reduced.
• D)Supplier costs will be reduced after the changeover.

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Definitions:

Net Advantage To Leasing

The financial benefit gained from leasing an asset as opposed to purchasing it, typically considered from a tax or cash flow perspective.

Tax Loss Carryovers

A provision that allows a taxpayer to use a net operating loss in one year to offset taxable income in future years.

CCA Class

Capital Cost Allowance (CCA) Class refers to categories used in taxation to determine the depreciation rate that can be claimed for tax purposes on assets, depending on their nature and use in a business.

Break-Even Lease Payment

The payment amount at which the lessee neither profits nor loses money over the term of the lease.