Which of the Following Statements About Activity-Based Costing Is TRUE

question 122

Multiple Choice

Which of the following statements about activity-based costing is TRUE?

• A)It does not affect cost control.
• B)Indirect cost allocation bases are unlikely to be cost drivers.
• C)It provides less information than traditional cost systems.
• D)It provides similar results to traditional costing when one activity creates a substantial amount of total cost.
• E)It provides similar results to traditional costing when different products use resources from different activities in different proportions.

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Definitions:

Tax Burden

The financial charge or other levy imposed upon a taxpayer by a governmental organization in order to fund various public expenditures.

Economically Rational

Decision-making based on the principle of maximizing benefits while minimizing costs and resources.

Myopia

Refers to the difficulty human beings have with conceptualizing the more distant future. Leads to decisions that overly favor present and near-term options at the expense of more distant future possibilities.

Great Depression

A severe global economic downturn that lasted from 1929 to the late 1930s, marked by massive unemployment and the collapse of financial institutions.