Which of the Following Statements Is True of Costing Systems

question 128

Multiple Choice

Which of the following statements is true of costing systems?

• A) Single-indirect cost pool systems always result in overcosting of products.
• B) Single-indirect cost pool systems classify some direct costs as indirect costs.
• C) ABC systems always result in overcosting of products.
• D) ABC systems classify some indirect costs as direct costs helping to improve processes

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Definitions:

Average Cost

The total cost of production divided by the number of goods produced, representing the cost on average of producing each unit of output.

Average Variable Cost

The total variable cost divided by the quantity of output produced, representing the variable cost of producing each unit of output.

Fixed Costs

Fixed costs are business expenses that remain constant regardless of the level of production or sales, such as rent, salaries, or insurance premiums.

Total Cost

The total expense of producing goods, encompassing both constant and fluctuating expenses.