For an Activity Base to Be Useful in Cost Behavior

question 182

Multiple Choice

For an activity base to be useful in cost behavior analysis

• A) the activity should always be stated in dollars.
• B) there should be a correlation between changes in the level of activity and changes in costs.
• C) the activity should always be stated in terms of units.
• D) the activity level should be constant over a period of time.

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Definitions:

Subsidiary Shares

Shares owned by a parent company in a subsidiary, representing a controlling interest in that subsidiary.

Common Shares

Shares of stock representing ownership in a company, giving holders voting rights and a share in the company’s profits through dividends.

Stockholders' Equity

The residual interest in the assets of an entity after deducting liabilities, representing ownership interest held by stockholders.

Noncontrolling Interest

The portion of equity in a subsidiary not owned by the parent company, reflecting the interests of outside investors.