Which of the Following Statements Is True

question 64

Multiple Choice

Which of the following statements is true?

• A) Cost drivers are a special kind of allocation base
• B) Allocation bases are a special kind of cost driver
• C) Cost drivers and allocation bases are two names for the same thing
• D) Allocation bases are seldom used in traditional costing systems

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Definitions:

Customer Amounts

Sums of money owed by customers to a business, typically arising from the purchase of goods or services on credit.

Merchandise Purchases

The total cost incurred by a merchandising company to buy goods for resale during a period.

Beginning Inventory

The inventory on hand at the start of an accounting period, before any purchases or production have been added.

Desired Ending Inventory

The inventory level that a company aims to have at the end of a period to meet forecasted sales and to provide a buffer for uncertainties.