Select the Incorrect Statement from the Following

question 60

Multiple Choice

Select the incorrect statement from the following.

• A) If overhead costs are allocated on the basis of activities,the amount of overhead allocated to a particular product can be reduced by increasing the number of activities required by the product,thereby spreading the overhead costs over more units.
• B) Activity costs are considered relevant for decision making because the cost of an activity will be avoided if the activity is eliminated.
• C) In highly automated environments where companies produce many different products with varying levels of production,activity-based cost drivers are superior to volume-based drivers.
• D) Activity-based cost drivers produce a better cost allocation than volume-based drivers because they distribute only relevant costs to the appropriate products.

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Definitions:

Pension Funding

The process of setting aside financial resources to cover future pension benefits for employees.

Cumulative Gain

The total amount of profit earned over a period of time, adding together successive gains from operations or investments.

Corridor Threshold

A term used in pension accounting that refers to the allowable range in fluctuation in the value of pension assets or liabilities; amounts outside this corridor may require amortization to keep the pension's accounting measures stable.

Pension Expense

The annual cost recognized by an employer for its contributions to employees' retirement plans, reflecting the cost of benefits earned by employees during the year.