Which of the Following Is True with Activity Based Cost

question 53

Multiple Choice

Which of the following is true with activity based cost accounting?

• A) Activity-based costing ignores the allocation of marketing and distribution costs.
• B) Activity-based costing is more likely to result in major differences from traditional costing systems if the firm manufactures only one product rather than multiple products.
• C) The focus is on activities that account for a sizable fraction of indirect costs .
• D) Chances of product-cost cross-subsidization are higher in activity-based costing compared to traditional costing systems.

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Definitions:

General Partners

Individuals in a partnership who are responsible for the management of the partnership and are personally liable for its debts.

Consent

An agreement or permission given by an individual knowingly and freely without any form of coercion.

Limited Partners

Investors in a limited partnership who are not involved in day-to-day management and whose liability is limited to their investment.

Limited LLC Member

An investor in a Limited Liability Company (LLC) who does not participate in its daily management and whose liability is restricted to the amount of their investment.