(Appendix 5B)Why Would an Activity-Based Costing System That Is Designed

question 17

Multiple Choice

(Appendix 5B) Why would an activity-based costing system that is designed for internal decision making NOT conform to generally accepted accounting principles?

• A) Some manufacturing costs (i.e.,the costs of idle capacity and organization-sustaining costs)will not be assigned to products.
• B) Some non-manufacturing costs are assigned to products.
• C) First-stage allocations may be based on subjective interview data.
• D) All of the above.

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Definitions:

Unit Of Account

A standard numerical monetary unit of measurement of the market value of goods, services, and other transactions.

Function

In mathematics, a relation between a set of inputs and a set of permissible outputs with the property that each input is related to exactly one output.

Durable

Refers to goods that are designed to last and not wear out quickly, often used in contrast to consumable goods.

Price Information

Data or details about the cost of goods or services, which helps consumers and businesses make purchasing decisions.