A Cost Hierarchy Is Useful to Managerial Accountants Because It

question 31

True/False

A cost hierarchy is useful to managerial accountants because it categorizes various activity cost pools on the basis of the different types of cost drivers,cost-allocation bases,or different degrees of difficulty in determining cause-and-effect relationships.

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Definitions:

Net Working Capital

The difference between a company's current assets and current liabilities, indicating the short-term financial health and operational efficiency of the business.

Short-Term Debt

Financial obligations that are due for repayment within one year.

Current Liabilities

Obligations expected to require cash in less than one year, usually payables and accruals.

Temporary Working Capital

Additional working capital needed to support the fluctuating levels of business activity.