The Activity-Based Costing System

question 8

Multiple Choice

The activity-based costing system

• A)is the most appropriate method of cost accounting for rigid hierarchical organizations.
• B)effectively departmentalizes an organization based on its core functions, such as human resources and maintenance.
• C)provides a more accurate picture of how costs should be charged to products and services.
• D)assumes that organizations are bureaucratic "machines" that can be separated into component functions.
• E)fails to allocate costs across business processes and is less effective than traditional methods of cost accounting.

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Definitions:

Ratification

The act of officially approving or confirming an action or decision, usually after the fact, which might not have been initially authoritative or agreed upon.

Apparent Authority

Apparent authority refers to a situation where a third party is led to believe that an agent has the right to act on behalf of a principal, regardless of whether this is true.

Actual Authority

The explicit power given to an agent by a principal, enabling the agent to perform acts on behalf of the principal.

Taxable Income

The portion of an individual's or entity's income used to determine how much tax is owed to the government in a given tax year.