Which of the Following Statements Is True of Activity-Based Costing

question 148

Multiple Choice

Which of the following statements is true of activity-based costing (ABC) ?

• A) It determines the absolute cost per unit of production.
• B) It is more complex than the direct labor method.
• C) It involves a five-stage process.
• D) It assigns costs based on the "one size fits all" rule.

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Definitions:

Yield

The income returned on an investment, such as the interest or dividends received, expressed as a percentage of the investment's cost.

TIPS Bond

Treasury Inflation-Protected Securities are U.S. government bonds designed to safeguard investments against the detrimental impacts of inflation by being tied to inflation rates.

Real Rate of Return

The annual percentage profit earned on an investment, adjusted for changes in the price level due to inflation or deflation.

Coupon Rate

The annual interest rate paid by a bond issuer to its bondholders, usually expressed as a percentage of the bond's face value.