What Might Be a Reason to NOT Change from a Traditionally-Based

question 81

Multiple Choice

What might be a reason to NOT change from a traditionally-based costing system to an activity-based costing system?

• A)Products or services are similar in volume and activity.
• B)Support services are spread evenly throughout the company's activities.
• C)Overhead is a low component of the overall cost.
• D)All of the above are valid reasons.

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Definitions:

Breakeven

The point at which total revenues equal total costs, resulting in neither profit nor loss.

Unit Selling Price

The price at which individual units of a product are sold to customers, not including discounts or added taxes.

Unit Variable Costs

The costs that vary directly with the level of production or service, measured on a per unit basis.

Total Fixed Costs

The sum of all costs that remain constant regardless of the level of production or sales volume, encompassing items such as rent, salaries, and insurance premiums.