A Company That Uses Activity-Based Costing Would Likely Allocate Costs

question 55

Multiple Choice

A company that uses activity-based costing would likely allocate costs from:

• A)service departments to production departments.
• B)service departments to products and services.
• C)service departments to production departments and then to products and services.
• D)activity cost pools to production departments.
• E)activity cost pools to products or services.

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Definitions:

Profit Centers

Parts of a company treated as standalone businesses responsible for generating their own revenues and profits.

Income Statements

A financial report that details a company's revenues, expenses, and profits over a specific period, showing how the net income is derived.

Return on Investment

A measure used to evaluate the efficiency or profitability of an investment, computed as the net profit of the investment divided by the cost of the investment.

Investment Turnover

A measure of a company's efficiency in using its assets to generate sales or revenue.