What Are the Main Advantages of Volume-Based Allocation Methods Compared

question 5

Multiple Choice

What are the main advantages of volume-based allocation methods compared to activity-based costing?

• A)Volume-based methods are easier to use and less costly to implement and maintain.
• B)Volume-based methods are more accurate and allowed by GAAP.
• C)Volume-based methods are less accurate and easier to use.
• D)Volume-based methods are harder to use and more costly to implement and maintain.
• E)There are no advantages to using volume-based methods.

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Definitions:

Ordinary Interest

Interest that is calculated based on a 360-day year, often used in banking and finance for simplifying interest calculations on loans and investments.

Exact Interest

This refers to the method of calculating interest based on a 365-day year or actual number of days in a month, providing a precise interest calculation.

Simple Interest

Interest calculated only on the principal amount, or on that portion of the principal amount which remains unpaid.

Exact Interest

A redefined term referring to the method of calculating interest based on a 365-day year, highlighting the precision in financial computations.