In an ABC System, Flexible Costs

question 112

Multiple Choice

In an ABC system, flexible costs:

• A) Vary with activity levels
• B) Remain fixed regardless of activity levels
• C) Should not be included in ABC cost pools
• D) Are related to capacity

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Definitions:

Production Function

An economic model that describes the relationship between inputs used in production and the resulting output.

Double Its Inputs

The act of a firm increasing the amount of inputs used in production, such as labor and capital, by two times.

Level of Output

The quantity of goods or services produced by a firm or economy during a specific time period.

Cobb-Douglas

A mathematical function used in economic models to represent the relationship between two or more inputs and the resulting level of output.