An Activity-Based Analysis That Focused Only on Manufacturing Overhead Would

question 159

Multiple Choice

An activity-based analysis that focused only on manufacturing overhead would

• A)not improve GAAP-based financial statements.
• B)improve GAAP-based financial statements.
• C)improve statement sent to the SEC by publicly-traded companies.
• D)both improve GAAP-based financial statements and statement sent to the SEC by publicly-traded companies.

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Definitions:

ABC Costing System

Activity-Based Costing is an accounting method that assigns costs to products or services based on the activities that go into producing them.

Plantwide Overhead Allocation

A method of distributing overhead costs to all products or services based on a single cost driver across the entire plant or factory.

Production Activities Levels

Refers to the volume or intensity of production activities, which can vary based on demand and capacity, affecting costs and operational efficiency.

ABC Overhead Allocation

Stands for Activity-Based Costing Overhead Allocation, a method that assigns overhead costs to products based on the activities they require, ensuring more accurate product costing.