When Predicting Cost Behaviour,the Volume of Production for Which the Fixed

question 49

Multiple Choice

When predicting cost behaviour,the volume of production for which the fixed and variable cost relationships are assumed to hold true is called the:

• A) relevant cost area.
• B) regression area.
• C) dependent variable area.
• D) relevant range.

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Definitions:

Activity Rate

The predetermined overhead rate used in activity-based costing to allocate costs to products or services based on specific activities.

Activity-based Costing

A costing method that assigns costs to products or services based on the activities they require.

First-stage Allocation

The initial process of assigning overhead costs to different departments or cost centers in a business based on relevant criteria.

Plantwide Overhead Rate

A single overhead absorption rate used throughout a factory or plant for allocating overhead costs to products.