A Major Advantage in Changing from a Traditionally Based Costing

question 33

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:

Personally Insolvent

A state in which an individual cannot meet their debt obligations with their available financial resources, potentially leading to bankruptcy.

Capital Accounts

Accounts that show the net ownership interest of an entity's owners, including their contributed capital and retained earnings.

Final Settlement

The resolution and closure of a financial transaction, including the final transfer of funds or assets between parties.

Profits and Losses

Financial terms referring to the income earned and the expenses incurred by a business during a period, impacting the overall financial health.