Indicate Whether Each of the Following Statements Is True or False

question 142

Essay

Indicate whether each of the following statements is true or false.
The allocation of indirect costs using activity-based costing is a three-step process._____
The first stage of activity-based costing is to calculate activity rates._____
A typical business may engage in thousands of different activities._____
Determining the number of activity centers to use in an activity-based costing system should be based on a cost/benefit analysis._____
A traditional cost allocation system first assigns costs to activity centers and then uses a single volume-based cost driver to assign the costs to products._____

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Definitions:

Discounts Lost

The additional cost a company incurs for not taking advantage of early payment discounts offered by suppliers.

Net Method

An accounting method where discounts for early payment are assumed to be taken and purchase discounts are deducted from the cost of purchases.

Recording Purchases

The process of documenting the acquisition of goods or services in the financial records of an entity, impacting its inventory or expense accounts.

Periodic Inventory System

An accounting method that updates inventory levels and cost of goods sold at the end of an accounting period, not continuously.