ABC Systems Are Typically Associated With

question 103

Multiple Choice

ABC systems are typically associated with:

• A) Higher quality and improved cycle time
• B) Manufacturing firms, but not service firms
• C) Service firms, but not manufacturing firms
• D) Higher profitability for all firms that implement them

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Definitions:

Cost Pool

A collection of specific expenses, usually organized by department or service area, used as a basis for assigning costs to products or services.

Direct Materials Dollars

The total cost of all the raw materials used in the production of a product.

Factory Overhead Rate

Factory overhead rate is the method of allocating indirect manufacturing costs, like utilities and rent, to individual units of production based on a specific allocation base.

Assembly Department

a division within a manufacturing plant where components are put together to create a final product.