Which of the Following Statements Is True of ABC Systems

question 79

Multiple Choice

Which of the following statements is true of ABC systems?

• A) ABC systems are time-driven cost systems.
• B) ABC systems classify some direct costs as indirect costs and some indirect costs as direct costs.
• C) ABC systems provide valuable information to managers beyond accurate product costs.
• D) ABC systems assume all costs are variable costs.

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Definitions:

Estimated Sales Price

The anticipated sale price of a product or asset, often used in budgeting and financial forecasting.

Sensitivity Analysis

A method for assessing the effects of varying independent variable values on a specific dependent variable, based on certain assumptions.

Discount Rate

The interest rate used to discount future cash flows to their present value, reflecting the opportunity cost of capital.

Tax Credit

An amount that taxpayers can subtract directly from taxes owed to their government.