Why Do We Use Market-Based Weights Instead of Book-Value Weights

question 54

Essay

Why do we use market-based weights instead of book-value weights when computing the WAAC?

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Definitions:

Expected Activity

The anticipated level of operations or production, often used for budgeting and planning.

Activity-Based Costing

A costing method that assigns overhead and indirect costs to specific activities, providing detailed insights into the actual costs of processes, products, or services.

Batch Setup

Batch setup refers to the process and time required to prepare equipment and systems for manufacturing a specific batch of products, including assembly and configuration activities.

Expected Activity

The projected level of operation or production, often used in budgeting and planning processes.