Using an Activity-Based Costing System (ABC) Enables a Firm to Calculate

question 32

Multiple Choice

Using an activity-based costing system (ABC) enables a firm to calculate overhead variances for:

• A) Sales volume and production volume.
• B) Spending and selling price.
• C) Each activity-based cost driver.
• D) Semi-variable overhead costs.
• E) Semi-fixed overhead costs.

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Definitions:

Capital Structure

The mix of debt and equity financing a company uses to fund its operations and growth.

M&M Proposition II

Modigliani and Miller's Proposition II states that a company's cost of equity increases as it increases its leverage due to the risk premium on equity.

Debt-Equity Ratio

A financial ratio that measures the relative proportion of shareholders' equity and debt used to finance a company's assets.

Financial Risk

The chance of incurring a loss in capital in an investment or business operation.