When Combining Activities in an Activity-Based Costing System, Batch-Level Activities

question 257

True/False

When combining activities in an activity-based costing system, batch-level activities should be combined with unit-level activities whenever possible.

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Definitions:

Variable Expenses

Expenses that vary directly with the amount of production or activity level.

Fixed Expenses

Costs that do not fluctuate with the volume of production or sales, remaining constant over a period, such as rent, salaries, and insurance premiums.

Net Operating Income

A gauge of a corporation's earnings from its main operating activities, not including the effects of interest and taxes.

Sales Increase

An upward trend in the volume or value of sales transactions over a particular period, indicating growth in business activity.