ABC Systems Use the Concept of a ________ to Identify

question 4

Multiple Choice

ABC systems use the concept of a ________ to identify the cost drivers that best demonstrate the cause-and-effect relationship between each activity and the costs in the related cost pool.

• A)cost hierarchy
• B)cost pool
• C)cost allocation
• D)cost driver

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Definitions:

Business Unit

refers to a division, department, or section of an organization that focuses on specific business functions or market segments, operating semi-independently.

Subgroups

Smaller distinct groups formed within a larger group, often with specific roles, characteristics, or interests that differentiate them from the wider group.

Identity-Based Subgroup

A subgroup within a larger group defined by shared characteristics or identities, such as ethnicity, gender, or professional background.

Social-Group Based Identities

The aspects of an individual’s sense of self that are derived from their membership in social groups, such as cultural, ethnic, or professional groups.