A Well-Designed Activity-Based Costing System Starts with

question 87

Multiple Choice

A well-designed activity-based costing system starts with

• A) identifying the activity-cost pools.
• B) computing the activity-based overhead rate.
• C) assigning overhead costs to products.
• D) analyzing the activities performed to manufacture a product.

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Definitions:

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditure to the appropriate years.

Interest Income

Income earned from investments such as savings accounts, bonds, or loans, usually calculated as a percentage of the principal amount.

Interest Receivable

The amount of interest that has been earned but not yet received in cash or recorded by the recipient company.

Effective Interest Rate

The real rate of interest earned or paid on an investment, loan, or other financial product, accounting for the effects of compounding.