ABC System Are Likely to Provide the Most Benefits to a Company

question 32

True/False

ABC system are likely to provide the most benefits to a company with significant amounts of indirect costs that are allocated using just one or two costs pools and products that make diverse demands on resources.

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Definitions:

Indirect Ownership Interests

Refers to a situation where an entity owns an interest in another entity through an intermediary rather than directly.

Tiered Corporate Group

A hierarchical structure where a parent company controls subsidiary companies, which in turn may control their own subsidiaries, creating multiple levels of entity relationships.

Control

The power to govern the financial and operating policies of an entity so as to obtain benefits from its activities, often through ownership of a majority of voting rights.

Sequential Consolidation Method

A process of combining financial statements of a parent company and its subsidiaries one at a time in a specific sequence.