Assume That You Have Made Profit Calculations Based on Standard

question 23

Multiple Choice

Assume that you have made profit calculations based on standard profit calculation methods and activity based costing methods. In which ways will this information be beneficial to the management team? Select all the true statements.

• A) Under an activity based costing system the various support activities that are involved in the process of making products or providing services are identified.
• B) The cost drivers that cause a change to the cost of activities are also identified and used as the basis to attach activity costs to a particular product or service.
• C) Through the tracing of costs to product in this way ABC establishes less accurate costs for the product or service.
• D) The identification of cost drivers provides information to management to enable them to take actions to improve the overall profitability of the company.
• E) Operational analysis will provide information to management on how costs can be incurred and managed.

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Definitions:

Class Conflict

When the interests of one class are in opposition to those of another.

Caste System

An ascribed system of hereditary class designation.

Social Mobility

Movement between social classes.

Reincarnation

The belief, associated with Eastern religions, that one’s essence does not die and instead is reborn in another form.