Which of the Following Statements About Activity-Based Costing Is NOT

question 158

Multiple Choice

Which of the following statements about activity-based costing is NOT true?

• A)Activity-based costing is useful for allocating marketing and distribution costs.
• B)Activity-based costing is more likely to result in major differences from traditional costing systems if the firm manufactures only one product rather than multiple products.
• C)Activity-based costing seeks to distinguish batch-level, product-sustaining, and facility-sustaining costs, especially when they are not proportionate to one another.
• D)Activity-based costing differs from traditional costing systems in that products are not cross-subsidized.

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Definitions:

Current Ratio

A measurement indicating how well a business can cover its short-term debts with its available assets, made by dividing current assets by current liabilities.

Financial Statements

Official records that outline the financial activities and condition of a business, individual, or other entity.

Average Collection Period

The mean number of days a company waits to get payments from customers for products or services provided on credit.

Balance Sheet

A document showcasing a corporation's assets, obligations, and the equity held by shareholders on a specific date.