An Important Benefit of Activity Based Costing Is

question 10

Multiple Choice

An important benefit of activity based costing is

• A) The simplicity of cost allocation.
• B) The acknowledgment and reward of employee effort.
• C) The ability to highlight waste and streamline business processes.
• D) The acceptance by stockholders of other sources of financing.
• E) The ability to monitor the board of directors.

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Definitions:

Merchandise

Goods that are purchased for the purpose of being sold to customers in the retail or wholesale market.

Periodic Inventory System

An inventory system that updates the inventory balance at specific intervals, necessitating physical counts.

Cost of Merchandise

The total purchase cost of goods that a retailer, wholesaler, or distributor has bought for the purpose of reselling.

Freight In

The cost associated with transporting goods from the supplier to the buyer, typically recorded as part of the inventory cost.