Activity-Based Costing Can Only Be Used to Allocate Manufacturing Factory

question 31

True/False

Activity-based costing can only be used to allocate manufacturing factory overhead.

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Definitions:

Salesvolume

The total amount of a product sold within a specific period.

Degree of Operating Leverage

A financial ratio that measures the sensitivity of a company's operating income to its sales volume, highlighting the impact of fixed costs.

Variable Expenses

Costs that vary directly with the level of production or sales volume.

Operating Income

Earnings before interest and taxes (EBIT), representing the profit from a company’s ordinary, core business operations.