A Difference in GAAP-Based Product Costing and Activity-Based Costing Is

question 44

Multiple Choice

A difference in GAAP-based product costing and activity-based costing is that under activity-based costing

• A)All costs are classified as product and period costs whereas under GAAP they are classified by behavior.
• B)Sales less cost of goods sold is classified as gross profit whereas under GAAP this subtotal is titled contribution margin.
• C)Selling and administrative costs are allocated to products if they are incurred to provide resources that are consumed by unit-level, batch-level or product-level activities.
• D)All costs are traceable whereas in GAAP-based costing all costs are not traceable.

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Definitions:

United States Treasury

The department of the federal government responsible for managing national finances, including producing currency, collecting taxes, and issuing government debt.

Monetrary Unit

The standard unit of currency used in a country's monetary system, facilitating the exchange of goods and services.

Medium of Exchange

A mediating device designed to help in the transaction, acquisition, or swapping of items between participants.

Store of Value

An asset that can be saved, retrieved, and exchanged at a later time, and predictably will be able to purchase goods or services equivalent to its current value.