ABC Eliminates All Arbitrary Cost Allocations

question 63

True/False

ABC eliminates all arbitrary cost allocations.

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Definitions:

Rate Variance

The difference between the actual rate paid for something and the standard or expected rate.

Direct Labor Hours

The total hours worked by employees directly involved in the manufacturing of products or delivery of services.

Spoilage

Materials or products that are damaged or unsuitable for sale or use and are written off as a loss.

Machine Breakdowns

Unplanned failures or malfunctions of machinery, often disrupting production processes and requiring repair or replacement.