Implementation of an Activity-Based Costing System Requires a Company to Generate

question 138

True/False

Implementation of an activity-based costing system requires a company to generate more detailed accounting information than would be required by a traditional product cost system.

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Definitions:

Complement Rate

A rate equal to 100% minus the discount rate; used with the complement method in determining trade or cash discounts.

Net Price

The actual price paid for a product or service after deducting any discounts, rebates, or promotions.

Complement Method

Method of computing the net price directly, using the complement of the trade discount rate.

Trade Discounts

Discounts given to buyers that generally are based on the quantity purchased.