It Only Makes Sense to Implement an ABC System When

question 98

Multiple Choice

It only makes sense to implement an ABC system when ________.

• A) a single product is produced in bulk
• B) its benefits exceed its implementation costs
• C) it traces more costs as direct costs
• D) production process is labor-intensive

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Definitions:

Manufacturing Costs

Expenses directly related to the production of goods, including direct labor, direct materials, and manufacturing overhead.

Selling and Administrative Expenses

Costs related to the selling of products and the general administration of a business.

Differential Income

The difference in income between two alternative decisions or scenarios, used in managerial decision-making to determine the better financial option.

Variable Cost

Expenses that change in proportion to the amount of goods produced or the volume of sales.