Generally Speaking, Activity-Based Costing Traces Direct Costs More Accurately Than

question 46

True/False

Generally speaking, activity-based costing traces direct costs more accurately than traditional costing.

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs (fixed and variable) in the cost of a product.

Net Income

Net income is the total profit of a company after all expenses, taxes, and costs have been deducted from total revenue, often referred to as the bottom line.

Contribution Margin

The difference between sales revenue and variable costs, showing how much revenue contributes towards covering fixed costs and generating profit.

Absorption Costing

A method in accounting where all costs of manufacturing are absorbed by the units produced.