It ONLY Makes Sense to Implement an ABC System When

question 45

Multiple Choice

It ONLY makes sense to implement an ABC system when:

• A)ABC provides information to make better decisions.
• B)its benefits exceed implementation costs.
• C)ABC traces more costs as direct costs.
• D)there is a strong cause-and-effect relationship between costs in the cost pools and their cost-allocation bases.

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Definitions:

Price/earnings Ratio

A valuation metric for companies, calculated as the market value per share divided by the earnings per share.

Excess Cash

Refers to the amount of cash held by a company that exceeds the normal operational needs, often indicating a potential for investment, distribution to shareholders, or acquisition.

Dividend

A part of a company's profits distributed to its shareholders, usually four times a year.

Share Repurchase

A process where a company repurchases its own stock from the market, leading to a decrease in the total shares available publicly.