If an Organization Has Implemented an ABC or ABM System

question 170

Multiple Choice

If an organization has implemented an ABC or ABM system, they will already have accomplished which of the following?

• A) Identified the activities within an organization.
• B) Estimated the demand for each activity's output.
• C) Assessed the cost of resources required to produce this activity output.
• D) All of these.
• E) None of these.

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Definitions:

Actual Cost

The realized expenses incurred in the production or acquisition of goods and services, as opposed to estimated or standard costs.

Overhead Incurred

The actual overhead expenses that a company has experienced during a specific period, which may include costs related to rent, utilities, or administrative salaries.

Overhead Account

An accounting term that refers to all ongoing business expenses not directly tied to a specific product or service.

Applied Overhead

This is the process of assigning estimated overhead costs to specific cost objects based on a predetermined rate or basis such as labor hours or machine hours.