APL Corporation Allocates Overhead to Cost Objects Using a Two-Stage

question 7

Multiple Choice

APL Corporation allocates overhead to cost objects using a two-stage process. From this information, we can infer that APL:

• A) Uses a traditional costing system
• B) Uses an activity-based costing system
• C) May be using either a traditional or an activity-based costing system
• D) Is reporting its product costs accurately

---

Definitions:

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, measuring the true profitability of a firm.

Profit-Maximizing

A method or strategy businesses use to achieve the highest possible profit from their operations.

Perfectly Competitive

Refers to a market structure where many firms sell identical products, and there are no barriers to new firms entering the market.

Market Price

The prevailing market price for buying or selling an asset or service currently.