Consumers Are Not Considered to Be the Customers If They

question 55

Multiple Choice

Consumers are not considered to be the customers if they do not have continuing relationship with the financial institution. A relationship is considered NOT to be a continuing relationship if:

• A) The consumer obtains financial services only in isolated transactions, such as using an ATM
• B) The consumer's loan is sold and servicing rights are retained
• C) The consumer purchases airline tickets or travel insurance in an isolated transaction
• D) The consumer is a beneficiary or grantor of a trust not administrated by the bank

Analyze potential distortions in product costing and decide on the importance of adopting ABC in different scenarios.

Calculate activity rates and allocate costs accurately under ABC.

Recognize the limitations and challenges of implementing ABC.

Understand the different types of activities (unit, batch, product, facility) within ABC.

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Definitions:

Variable Overhead Rate

A rate used to assign variable overhead costs to units of production, based on an activity driver such as labor hours or machine hours, fluctuating with changes in production activity.

Overhead Efficiency

The effectiveness with which a business uses its overhead expenses to produce goods or services.

Fixed Overhead Budget

A forecast of the fixed costs that a company expects to incur over a certain period, helping in planning and controlling expenses.

Fixed Overhead Volume

The portion of fixed overhead costs that reflect the difference between actual production volume and the standard or expected production volume.