Consider the Following Statements About Relevant Costing and Activity-Based Costing

question 81

Multiple Choice

Consider the following statements about relevant costing and activity-based costing:
I. The concept of relevant costs and benefits cannot be used in conjunction with an activity-based costing system.
II. The concept of relevant costs and benefits must be modified for use with an activity-based costing system.
III. Generally speaking, the decision maker can better associate relevant costs with the activities that drive them under an activity-based costing system than under a conventional product-costing system.
Which of the above statements is (are) true?

• A) I only.
• B) II only.
• C) III only.
• D) I and II.
• E) II and III.

---

Definitions:

Freedom of Contract

The principle that individuals have the liberty to create, define, and enforce agreements without undue government interference.

Projected Earnings Figures

Financial estimates predicting a company's future profitability over a specific period of time.

Actual Earnings

The genuine amount of money earned by an individual or business, often after taxes and deductions.

Hypothetical Earnings

Estimated earnings based on hypothetical scenarios or assumptions, often used in projections or models.