In an Activity-Based Costing System, a Critical Question to Ask

question 145

True/False

In an activity-based costing system, a critical question to ask during activity identification is, "How important is this activity to the overall strategy of the organization?"

Understand the importance of fixed and variable costs in profit planning.

Apply decision rules for further processing decisions.

Understand how to calculate and interpret the change in net income resulting from discontinuing a product.

Calculate the opportunity cost of accepting a special order or utilizing capacity for different products.

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Definitions:

Operant Conditioning

A method of learning that occurs through rewards and punishments for behavior.

Contingent Reinforcement

A reinforcement strategy in which a reward or punishment is given only after the desired behavior is demonstrated.

Discrimination Learning

A process in learning theory where an individual learns to respond differently to various stimuli because they have been reinforced for doing so.

Modeling

A learning technique based on observing and imitating the behavior of others, often used in therapy and behavior modification programs.