Activity-Based Costing Has Been Found to Be Useful in Each

question 18

Multiple Choice

Activity-based costing has been found to be useful in each of the following service industries except

• A) banks.
• B) hospitals.
• C) telephone companies.
• D) ABC has been useful in any of these industries.

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Definitions:

Process Costing

An accounting methodology used to allocate the costs of producing products that are indistinguishable from each other and are produced in a continuous process.

Weighted-Average Method

A method for valuing inventory that determines the cost of goods sold and the final inventory value by computing the average cost of all products available for sale throughout the period.

Conversion Costs

The combined costs of direct labor and manufacturing overhead, which are incurred to convert raw materials into finished goods.

Process Costing

A costing method used in mass production where costs are assigned to processes or departments, not individual units.