Eaton Company Uses Activity-Based Costing to Allocate Overhead Costs to Products.When

question 17

Multiple Choice

Eaton Company uses activity-based costing to allocate overhead costs to products.When figuring the cost of ordering raw materials,which of the following is likely the best cost driver for this activity?

• A)Number of orders placed.
• B)Weight of the parts ordered.
• C)Square footage of the purchasing department area.
• D)Direct labor cost.
• E)None of the answer choices is correct.

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Definitions:

Production Possibilities Frontiers

A curve depicting the maximum output combinations of two goods that can be produced given the resources and technology.

Opportunity Cost

The value of the best alternative that must be forgone when making a choice.

Chocolate Truffle

A type of chocolate confectionery, traditionally made with a chocolate ganache center coated in chocolate, cocoa powder, or chopped toasted nuts.

Absolute Advantage

The ability of an individual, company, or country to produce a good or service more efficiently than its competitors with the same amount of resources.