Which of the Following Activity Bases Would Be the Most

question 9

Multiple Choice

Which of the following activity bases would be the most appropriate for gasoline costs of a delivery service?

• A) number of truck drivers
• B) total of miles driven
• C) how many trucks are in service
• D) number of packages picked up

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Definitions:

Variable Selling

Costs that vary directly with the level of sales or production volume, such as commissions or shipping charges.

Administrative Expenses

Costs related to the general operation of a company, such as executive salaries, office supplies, and legal fees.

High-low Method

A technique used in cost accounting to estimate variable and fixed costs based on the highest and lowest levels of activity during a period.

Contribution Margin

The amount by which the sale of a product exceeds its variable costs, indicating how much contributes towards covering fixed costs and generating profit.