In an Activity Framework, What Best Correlates with Controlling Costs

question 94

Multiple Choice

In an activity framework, what best correlates with controlling costs?

• A) selling more goods
• B) managing activities
• C) reducing direct labour hours
• D) carefully identifying resource drivers

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Definitions:

Standard Cost

A predetermined cost of manufacturing a single unit or a number of product units during a specific period under normal conditions.

Variable Overhead

Costs that vary with production volume, such as utilities or materials, which do not remain fixed over time.

Cost Driver

A factor that causes the cost of an activity to increase or decrease, such as machine-hours, labor hours, or production volume.

Budget Variance

The difference between the budgeted or planned amount of expense or revenue, and the actual amount incurred or earned.