For Which One of the Following Reasons Is the Calculation

question 109

Multiple Choice

For which one of the following reasons is the calculation of overhead variances in conjunction with an activity-based cost (ABC) system desirable from the standpoint of management?

• A) The resulting cost-management system is currently required by generally accepted accounting principles (GAAP).
• B) Such a system would be consistent with the goal of managing activities rather than cost.
• C) Such a system is likely to be less costly to design and implement.
• D) Far fewer variances would likely be expected under such a system.
• E) Conventional systems, though appropriate for a manufacturing setting, are not applicable to the service sector.

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Definitions:

Protozoan

A diverse group of single-celled eukaryotic organisms, many of which are parasitic.

Bacterium

A large domain of prokaryotic microorganisms, typically a few micrometers in length, that can exist as single cells or in clusters, and have various roles in the environment, medicine, and industry.

Prion

Infectious agents composed of protein in a misfolded form, associated with several neurodegenerative diseases.

Virus

A microscopic infectious agent that can only replicate inside the living cells of an organism, leading to a variety of diseases in humans, animals, and plants.