Which of the Following Statements Regarding Activity-Based Costing (ABC) Is

question 49

Multiple Choice

Which of the following statements regarding activity-based costing (ABC) is true?

• A) Resources consume activities and products consume costs.
• B) Activities consume resources and products consume activities.
• C) Costs consume activities and products cause costs.
• D) Resources consume activities and activities cause costs.

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Definitions:

Investment Center

A business unit within an organization that is responsible for its own revenue, expenses, and investments, and is analyzed for profitability.

Service Department

A segment within a company that provides support services to the production departments or other direct operational areas, helping them operate efficiently.

Charge Rates

Prices or rates established for services provided, often used in professional industries like law and consulting.

Residual Income

The excess of divisional income from operations over a “minimum” acceptable income from operations.