What Sometimes Makes Implementation of Activity-Based Costing Difficult in Service

question 49

Multiple Choice

What sometimes makes implementation of activity-based costing difficult in service industries is

• A) the labeling of activities as value-added.
• B) identifying activities, activity cost plus, and cost drivers.
• C) that a larger proportion of overhead costs are company-wide costs.
• D) attempting to reduce or eliminate non-value-added activities.

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Definitions:

Collection Float

The time difference between when a check is deposited and when the funds are available in the account, affecting the business’s cash flow.

Checks

Written, dated, and signed instruments that direct a bank to pay a specific sum of money to the bearer or a designated entity.

Average Payments

The mean amount paid over a defined period payments.

Average Daily Float

The average amount of uncollected funds represented in checks or other negotiable instruments over a specified period.