Activity-Based Costing Systems

question 44

Multiple Choice

Activity-based costing systems:

• A) use a single, volume-based cost driver.
• B) assign overhead to products based on the products' relative usage of direct labor.
• C) often reveal products that were under- or over-costed by traditional costing systems.
• D) typically use fewer cost drivers than more traditional costing systems.
• E) have a tendency to distort product costs.

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Definitions:

Timely Inventory Control

The practice of managing and optimizing stock levels to meet demand without incurring excess or shortage, ideally in a timely manner.

Efficient Production Planning

A process that ensures resources are used effectively to meet production goals, minimizing waste and costs while maximizing output.

Financial Ratios

Quantitative measures derived from financial statements that are used to evaluate a company's financial health, performance, and viability.

Breakeven Quantity

The number of units that must be sold at a given price to cover all associated costs, resulting in neither profit nor loss.