The First Step in Developing Activity-Based Product Costs Is to Develop

question 87

True/False

The first step in developing activity-based product costs is to develop activity cost pools.

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Definitions:

High-margin Items

Products or services that generate a significantly higher percentage of profit compared to their cost of production or acquisition.

Low-margin Items

Products or services that generate a minimal profit margin, often sold to attract customers or achieve volume sales.

Contribution Margin Ratio

A financial metric indicating the portion of sales revenue that is not consumed by variable costs and therefore contributes to covering fixed costs.

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit.