How Does Direct Cost Tracing Improve Cost Accuracy

question 89

Multiple Choice

How does direct cost tracing improve cost accuracy?

• A)It identifies the cause-and-effect relationship between direct costs and indirect costs.
• B)It identifies the cause-and-effect relationship between activities and non-activities.
• C)It reclassifies costs or costs pools that vary with the quantity of a single activity cost driver as direct.
• D)It makes no assumptions about the cause-and-effect relationship between direct costs and activities.
• E)Because with a greater number of cost pools, it does not have to be concerned with the overhead costs used by different products.

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Definitions:

Exempt

To be free from an obligation, duty, or liability to which others may be subject; typically used in contexts like taxes, legal requirements, or regulations.

Redemption

The buying back of one’s property after it has been sold. The right to redeem property sold under an order or decree of court is purely a privilege conferred by, and does not exist independently of, statute.

Collateral

An asset that a borrower offers to a lender as security for a loan, which can be seized if the loan is not repaid.

Bankruptcy Petition

A formal request filed by an individual or entity seeking the protection of bankruptcy laws to resolve insolvency issues.