An Activity-Based Costing System That Is Designed for Internal Decision-Making

question 35

Multiple Choice

An activity-based costing system that is designed for internal decision-making will not conform to generally accepted accounting principles because:

• A) under activity-based costing some manufacturing costs (i.e., the costs of idle capacity and organization-sustaining costs) will not be assigned to products.
• B) under activity-based costing the sum of all product costs does not equal the total costs of the company.
• C) activity-based costing has not been approved by the United Nation's International Accounting Board.
• D) activity-based costing results in less accurate costs than more traditional costing methods based on direct labor-hours or machine-hours.

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Definitions:

Water Molecules

Water molecules are made up of two hydrogen atoms and one oxygen atom (H2O), the basic units of water, essential for all known forms of life.

Ice

A solid state of water that occurs when it freezes, found in natural environments on Earth's surface and elsewhere in the solar system.

Raindrops

Small droplets of water that fall from clouds in the atmosphere.

Coriolis Effect

A phenomenon that causes moving particles or objects within a rotating system, such as the Earth, to deflect to the right in the Northern Hemisphere and to the left in the Southern Hemisphere.