Which of the Following Is a Characteristic of Calculating Standard

question 26

Multiple Choice

Which of the following is a characteristic of calculating standard cost variances for manufacturing overhead costs under an activity-based cost (ABC) system?

• A) Only non-volume-related cost drivers are used in the cost-allocation process.
• B) An ABC system would likely have a greater number of standard cost variances reported each period.
• C) Fewer variances need to be reported, compared to the number of overhead variances calculated under a traditional cost system.
• D) Flexible budgets are used for planning but not cost-control purposes.
• E) The flexible-budget variance will be the same under both a traditional cost system and an ABC system.

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Definitions:

Financial Statement

A document that presents a detailed financial status of a company, including balance sheets, income statements, and cash flow statements, at a specific point in time.

Normal Balance

The side (debit or credit) where the balance of an account usually increases.

Account Category

A classification within accounting used to group similar types of accounts, such as assets, liabilities, equity, revenue, and expenses.

Accounts Receivable Subsidiary Ledger

is a detailed ledger showing individual transactions and balances for customers who owe money to the business, supplementing the general ledger.