If Activity-Based Costing Is Implemented in an Organization Without Any

question 100

Multiple Choice

If activity-based costing is implemented in an organization without any other changes being implemented,total overhead manufacturing costs will

• A)be reduced because of the elimination of non-value-added activities.
• B)be reduced because organizational costs will not be assigned to products or services.
• C)be increased because of the need for additional people to gather information on cost drivers and cost pools.
• D)remain constant and simply be spread over products using different cost drivers.

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Definitions:

FIFO Process Cost Method

An accounting method for valuing inventory and cost of goods sold, where the oldest costs are assigned to the sold units first.

Unit Cost

Unit cost represents the total expense incurred to produce, store, and sell one unit of a product or service, including all variables and fixed costs.

Period Cost

Costs that are not directly associated with the production of goods and are expensed in the accounting period in which they are incurred.

FIFO Method

"First In, First Out," an inventory valuation method where the oldest items are recorded as sold first.