The Activity Driver for the Shipping Activity Is the Number

question 30

Multiple Choice

The activity driver for the shipping activity is the number of orders shipped. Product X uses 40 orders, and Product Y uses 120 orders. What is the consumption ratio for product X?

• A) 0.215
• B) 0.250
• C) 0.300
• D) 0.625

---

Definitions:

Variable Costing

An accounting method that only considers variable costs (costs that fluctuate with production levels) in the calculation of product cost.

Absorption Costing

A costing approach that encompasses all costs associated with production, including direct materials, direct labor, and all overhead costs, both variable and fixed, in the unit cost of a product.

Ending Inventory

The total value of all unsold goods a company has at the end of an accounting period.

Gross Margin

The difference between sales revenue and the cost of goods sold, indicating the basic profitability of the products or services sold.