ABC Systems Use the Concept of a ________ to Identify

question 34

Multiple Choice

ABC systems use the concept of a ________ to identify the cost drivers that best demonstrate the cause-and-effect relationship between each activity and the costs in the related cost pool.

• A)cost driver
• B)cost pool
• C)cost allocation
• D)cost hierarchy

---

Definitions:

Marginal Subcontracting Cost

The additional cost incurred for each unit produced or service provided when a company resorts to subcontracting as opposed to in-house production.

Layoff Cost

Expenses associated with terminating employees, including severance pay and benefits continuation.

Hiring And Training Cost

The total expenses involved in recruiting new employees and providing them with the necessary training to perform their job roles effectively.

Regular Time Cost

The expense incurred from labor during normal working hours, excluding overtime or premium pay rates.