Which of the Following Statements Regarding Activity- Based Cost Drivers

question 3

Multiple Choice

Which of the following statements regarding activity- based cost drivers is correct?

• A) Activity- based cost drivers are measures of activity that are directly associated with production.
• B) Activity- based cost drivers are directly related to the volume of production.
• C) Activity- based cost drivers improve the accuracy of direct cost allocations.
• D) None of these answers is correct.

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Definitions:

End-Of-Period Processing

The procedures undertaken at the close of a financial reporting period to prepare accounts for financial reporting.

Financial Statements

Reports that provide detailed information about a company's financial status, including balance sheets, income statements, and cash flow statements.

Adjusted Trial Balance

A trial balance that reflects account balances after adjusting entries have been made for accruals, deferrals, and other financial events.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year, calculated as current assets divided by current liabilities.