Internal Entities Do Not Perform Any Information Processing Activities

question 73

True/False

Internal entities do not perform any information processing activities.

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Definitions:

Activity-Based Costing

A costing method that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption of each.

Overhead Rates

The method used to allocate indirect costs, such as utilities or rent, to products or services based on predetermined criteria, often as a rate per unit of activity.

Activity Cost Drivers

Factors that influence the costs of business activities, often used in activity-based costing to allocate costs more accurately.

ABC Costing System

Activity Based Costing system; a method of cost accounting that identifies and assigns costs to specific activities involved in the production process to better understand overhead costs.