Which of the Following Statements Is True of ABC Systems

question 113

Multiple Choice

Which of the following statements is true of ABC systems?

• A) ABC systems provide less insight than traditional systems into the management of the indirect costs.
• B) ABC systems are used by managers for strategic decisions rather than for inventory valuation in merchandising companies.
• C) Service companies find great value from ABC because a vast majority of their cost structure is composed of direct costs.
• D) ABC systems is valuable for pricing decisions but not for understanding, managing, and reducing costs in government institutions.

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Definitions:

Notes Payable

Short-term or long-term liabilities in the form of written promises to pay a specified amount with interest by a certain date.

Fixed Assets/Sales Ratio

A financial metric that indicates how efficiently a company is using its fixed assets to generate sales.

Financial Forecast

A prediction of future revenues, expenses, and profits, often used to make informed business decisions.

Financial Planning Models

Quantitative models used to project financial components such as revenue, expenses, and cash flow over a period, aiding in business strategy and decision-making.