The First Step in Developing an ABC System Is

question 9

Multiple Choice

The first step in developing an ABC system is

• A)calculate an activity cost allocation rate for each activity.
• B)allocate the costs to the cost object using the activity cost allocation rates.
• C)select an allocation base for each activity.
• D)identify the primary activities and estimate a total cost pool for each.

---

Definitions:

Residuals

The differences between observed and predicted values in a regression analysis, representing the error not explained by the model.

Heteroscedasticity

A situation in regression analysis where the variance of the error terms varies across different levels of an independent variable.

Oil Quality

The degree to which oil meets specific criteria to determine its suitability for particular uses, such as viscosity, purity, and absence of contaminants.

Standardized Residuals

The differences between observed and predicted values, divided by the standard error, used in statistical analysis to assess model fit.