Which of the Following Activity Cost Pools and Activity Measures

question 34

Multiple Choice

Which of the following activity cost pools and activity measures likely has the lowest degree of correlation? $\begin{array}{|l|l|l|l|}\hline & {\text { Activity Cost Pool }} & &{\text { Activity Measure }} \\\hline 1 & \text { Order department } && \text { Number of orders processed } \\\hline 2 & \text { Sales management } &&\text { Time spent by managers in each sales } \\&&&\text { territory }\\\hline 3 & \text { Accounts receivable processing } && \text { Number of customers } \\\hline 4 & \text { Catering } & &\text { Numbers of meals served } \\\hline 5 & \text { Employee travel to job sites (sites } & &\text { Number of employees } \\&\text { are within } 100 \text {-mile radius of }\\&\text { company headquarters) }\\\hline\end{array}$

• A)1.
• B)2.
• C)3.
• D)4.
• E)5.

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Definitions:

Tax Burden

The total amount of income, property, and sales taxes that an individual or business must pay to various governments.

Leverage Ratio

A financial ratio indicating the level of debt used by a business to finance its assets and operations.

Interest Burden

The impact of interest expenses on a company's earnings, often expressed as a ratio or percentage of earnings before interest and taxes.

Return-On-Sales Ratio

A profitability metric that calculates the efficiency of a company in converting sales into profits, indicating how much of each dollar of sales is translated into profit.