Which of the Following Statements Is True Regarding the Identification

question 48

Multiple Choice

Which of the following statements is true regarding the identification of activities in an ABC system?

• A) All manufacturing companies should have identical types of activities.
• B) All merchandising companies should have identical types of activities.
• C) As a business becomes more complex,fewer activities need to be identified.
• D) Two different businesses which have the same type of activities can still choose different cost drivers.

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Definitions:

Cost Drivers

Factors that cause a change in the cost of an activity, such as machine hours, labor hours, or material size.

Vocational School

An educational institution that provides training and skills for specific trades or careers, focusing on practical job-related skills.

Revenue Variances

The difference between actual revenue and budgeted or forecasted revenue, indicating if a business is performing above, on, or below expectations.

Spending Variances

Differences between actual spending and budgeted amounts in a company's budget, indicating over or underspending.