Each of the Following Is a Limitation of Activity-Based Costing

question 92

Multiple Choice

Each of the following is a limitation of activity-based costing except that

• A) it can be expensive to use.
• B) it decreases control over overhead costs
• C) it is complex and can be difficult to understand
• D) some arbitrary allocations continue.

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Definitions:

Business Cycle

The fluctuation in economic activity that an economy experiences over a period, characterized by expansion and contraction phases.

Corporate Tax Rate

The proportion of a company's profits that is owed to the government as tax.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent, salaries, and loan payments.