Activity-Based Costing Is a Method of Accounting Which Is Very

question 37

Multiple Choice

Activity-based costing is a method of accounting which is very useful in making outsourcing decisions by doing

• A) total quality management.
• B) value-chain analysis.
• C) reengineering.
• D) MBO.
• E) benchmarking.

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Definitions:

Fixed Manufacturing Overhead Rate

A consistent charge per unit of production or period that allocates the total fixed manufacturing overhead costs.

Variances

The difference between expected and actual performance or costs in business operations.

Direct Labor-Hours

The total hours worked by employees directly involved in the manufacturing process, often used as a basis for allocating manufacturing overhead costs.

Standard Cost System

A system of accounting that uses cost standards for costing materials, labor, and overhead.