In an ABC System, an Activity Is Best Defined as A

question 33

Multiple Choice

In an ABC system, an activity is best defined as a:

• A) Type of task performed in an organization
• B) Collection of activities in a particular department
• C) Collection of cost drivers associated with a particular cost pool
• D) Group of cost pools associated with a particular department

---

Definitions:

Average Total Cost

The cost per unit is calculated by dividing the overall production cost by the quantity of units produced.

Average Variable Cost

The total variable cost divided by the quantity of output produced; it shows the variable cost per unit of output.

Increasing Returns to Scale

A situation in production where doubling the inputs results in more than doubling the output, leading to efficiencies and economies of scale.

Decreasing Returns to Scale

A situation in which a firm experiences a less than proportional increase in output despite a proportional increase in all inputs, typically due to inefficiencies.